Krishna Chaitanya - BUSINESS PROCESS REENGINNERING PDF

BUSINESS PROCESS REENGINNERING
FOR RETAIL BANKS
By
A KRISHNA CHAITHANYA
AKNOWLEDGEMENT
I would like to express my sincere gratitude to the Institute for Development and Research in
Banking Technology (IDRBT) and particularly Mr. MV Sivakumaran, who was my guide in this
project.
This opportunity of learning all the nuances of a banking platform and BPR in the banking of
the country was a boon to me as one rarely gets such exposure.
I would not hesitate to add that this short stint in IDRBT has added a different facet to my life as
this is a unique organization being a combination of academics, research, technology,
communication services, crucial applications, etc., and at the same time performing roles as an
arm of regulation, spread of technology, facilitator for implementing technology in banking and
non-banking systems, playing a role of an NGO (without being one) and many more varied
activities.
I am extremely grateful to Mr. MV Sivakumaran for his advice, innovative suggestions and
supervision. I thank him for giving me the opportunity to approach diverse sections of people
starting from bankers to general public.
I am thankful to the staff at IDRBT for helping me to get familiar with the environment. I am
thankful to my department, Department of Management Studies, SMS UOH and MR. Srinivas
internal guide of my project, for giving me this golden opportunity of working at a high-end
research institute like IDRBT.
I am thankful to IDRBT for providing such an amazing platform for students to work in real
application oriented research. Finally, I thank one and all who made this project successful either
directly or indirectly.
I sincerely thankful to my friend Amar, Vipul & Ashwini, with whom I worked throughout my
stint at IDRBT and the project was possible only with their cooperation. I also want to express
sincere gratitude to all friends for their support, feedbacks and encouragement during report
preparation & their active participation in survey.
A KRISHNA CHAITHANYA
Abstract
The dynamic changes in technology have lead each and every industry to
computerization and use of technology for effective utilization of resources, cost effectiveness
and profit maximization, for this Retail banking is also not an exception.
Business Process Reengineering is fundamental rethinking and radical redesign of

business processes to bring about dramatic improvements in performance. The stiff competition
in retail banking services is a pushing factor for retail banks to improve its service provision. To
achieve the desired goal, improving service quality and satisfying its customers, the bank
implemented BPR.
This report explains what are the different methods of BPR, key factors for the successful
BPR and how BPR implemented in SBI as an example. To understand the impact of BPR two
questionnaires were distributed to customers and bankers and analyzed findings from it.
KEY WORDS: Business Process Reengineering, BPR, Retail Banking.

Table of contents:
1. Introduction to BPR………………………………….………….…. 1
1.1. Business Process……………………………………………1
1.2. Business Process Reengineering…………………..………..2
1.3. Key Targets of BPR……………………………….….…….4
1.4. How can BPR be applied to an organization…….….…….5
1.5. Objectives of BPR…………………….…………..…..……7
1.6. Different BPR Methodologies……………………………..9
1.6.1. The Hammer / Champy methodology………….……9
1.6.2. Davenport’s and Short’s methodology……………..12
1.6.3. Consolidated BPR implementation Methodology ...15
1.7. Key Success Factors for BPR……………………………..19
2. Retail Banking………………………………………………………22
2.1 Introduction to Retail Banking………………………….22
2.3 Functional Area of Retail Banking……………………...24
2.3 Retail Banking in India…………………………………. 26
3. Business Process Reengineering for Retail Bank……………….. 31

3.1 BPR in State Bank of India…………………………….31
4. Impact of BPR on Retail banking………….……………………. 37

5. Conclusion……..……………………………………………….... 50
6. Annexure………………………………………………………….51
7. References
Business Process Reengineering for Retail Bank
1. Introduction to BPR
1.1 Business Process:

A business process is a group of logically related tasks carried out using a firm‟s
resources to provide customer oriented results in the support of the organization‟s
objectives.
Business processes are, simply a set of activities that transform a set of inputs into a set of
outputs (goods or services) for another person or process, using people and tools.
Figure 1- Business Process

Common Business Processes in Retail Bank:
 Account Opening
 Issue of cheque book
 Cash deposit
 Cash Withdrawal
 Cheque transfer
 Balance enquiry
 Credit card approval
 Loan disbursement
 Address change
There are many more operations apart from them which are listed above.
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1.2 Business Process Reengineering:
The globalization of the economy and the liberalization of the trade

markets have formulated new conditions in the market place which are characterized by
instability and intensive competition in the business environment. Competition is
continuously increasing with respect to price, quality and selection, service and promptness
of delivery.
Removal of barriers, international cooperation, technological innovations
cause competition to intensify. All these changes impose the need for organizational
transformation, where the entire processes and organization climate and organization
structure are changed.
Hammer and Champy provide the following definition:

The fundamental rethinking and radical redesign of the business processes to achieve
dramatic improvements in critical, contemporary measures of performance, such as cost,
quality, service and speed.
Daven port given following definition:

The analysis and design of workflows and processes within and between organizations.
Business activities should be viewed as more than a collection of individual or
even functional tasks; they should be broken down into processes that can be designed
for maximum effectiveness, in both manufacturing and service environment.
Example of BPR:
Consider a scenario where a customer want to apply for a new account and enquire about
for loan and ATM card in a typical vertical organization structure as shown in figure 2. Here
customer needs to wait in three different queues to get what he wanted to have.
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When BPR is applied for this particular bank which focuses on customer
satisfaction, cost reduction and efficient service they implemented “One Stop Shopping” as
a major customer service innovation, requires the close coordination with a team of staff
assigned to a process powered by IT for exchanging information and documents in order to
service the customer's request. For instance a customer applying for a loan "triggers" a team
of staff assigned to service a loan application.
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The customer communicates with only one person, called "case manager", for all three
inquiries, shown in figure 3.
Manager completes an application for a loan in electronic form, which in turn is

submitted through the network to the next team member, the credit control director, who
examines the credit status of the customer. If the credit status is not satisfactory the rejection of
the loan is approved by the credit manager and a rejection form is filled and it is returned to the
case manager. The case manager explains to the customer the reason that his application was
rejected.
On the other hand, if the credit status of the customer is satisfactory, the application
submitted electronically to the next team member, who calculates interest rates and payment
tables. The application is then submitted to the credit manager for approval using a digital
signature. The approval of the application along with the payment table is delivered to the
customer by the case manager.
1.3 Key targets of BPR:
Customer friendliness:
One of the main goals of introducing BPR is to get a competitive edge, and that can only
be gained by providing the customer more than what the others in the market asking for.
Effectiveness:
How effective is the product or service that the business or manufacturing company
providing the customer? If whatever product or service the business might be providing for the
customer is successful, then the customers would automatically want to buy that service again.
Efficiency:
How efficient is the company that is manufacturing the product in minimizing costs
before introducing it to the market? This is one of the questions that are believed to be very
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important. If a manufacturing company can master the skill of being efficient, they can
automatically customer friendly and effective.
1.4 How can BPR be applied to an organization?
When British Telecom had announced their Business Plan, all competitors were eager to
find out who would be the new CEO of the organization. To the surprise of all the new CEO it
was the customer. The company had decided to transform all the operations of the organization
the way customers wanted them to operate. The most important action in applying BPR is the
company's strategic goal to provide customer oriented services. BPR is a technique used to
implement this type of organizational structure.
Having the management commitment for change, another very important factor for
implementing BPR, is the enabling role of Information Technology. The way that businesses
are organized around departments is very logical since, for instance, there were physical barriers
in the communication of the accounting department with production department. (The warehouse
could be in another location in the other part of the city). So it wasn't possible for a cross-
functional team to communicate efficiently. In the 90s when telecommunication technologies
were becoming abundant and low costing BPR was becoming a world-wide applicable managing
technique for business upgrade, enabled by the technology. Employees can easily operate as a
team using intranets/extranets, workflow and groupware applications, eliminating distances. We
can work together even though we are located in different places.
Empowering people:
Empowerments means giving people the ability to do their work the right information, the right
tools, the right training, the right environment, and the authority they need. Information systems
help empower people by providing information, tools and training.
Providing Information:
Providing information to help people perform their work is a primary purpose of most
information systems although they provide information in many different ways. Some systems
provide information that is essential in informing a business process, such as the prices used to
create a customer‟s bill at a restaurant. Other systems provide information that is potentially
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useful but can be used in a discretionary manner, such as medical history information that
different doctors might use in different ways.
Providing Tools:
In addition to providing the right information, empowering people means giving them
the right tools. Consider the way planning analysts produce consolidated corporate plans based
on plans of individual divisions and departments. If the plans are submitted on paper, it is a
major task to add up the numbers to determine the projected corporate bottom line. When the
plan is changed during a negotiation process, the planning analyst has to recalculate the projected
results. With the right tools, the numerical parts of the plans arrive in a consistent, electronic
format permitting consolidation by a computer. This leaves the analyst free to do the more
productive work of analyzing the quality of the plan.
Providing Training:
Since information systems are designed to provide the information needed to support
desired work practices, they are often used for training and learning. As shown by an expert
system and a decision simulator, they sometimes provide new and unique training methods.
IBM developed an expert system for fixing computer disk drives. The expert system was
an organized collection of the best knowledge about fixing these disk drives, and it fostered rapid
and efficient training. Before the system was developed, technicians typically took between 1
and 16 months to become certified, but with the expert system, training time dropped 3 to 5
months.
Eliminating Unproductive Uses of Time:
Information systems can reduce the amount of time people waste doing unproductive
work. A study of how professionals and managers at 15 leading U.S. corporations spent their
time concluded that many professionals spent less than half of their work time on activities
directly related to their functions. Although the primary function of salespeople is selling, the
time breakdown for salespeople averaged 36 percent spent on prospecting and selling, 39 percent
spent on prospecting an selling, 3 percent on servicing accounts, 19 percent on doing
administrative chores, and 6 percent on training. Better use of information systems could save
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much of their unproductive time performing chores such as collecting product or pricing
information, determining order status for a customer, resolving invoice discrepancies, and
reporting of time and expenses.
Eliminating Unnecessary Paper:
One common way to improve data processing is to eliminate unnecessary paper.

Although paper is familiar and convenient for many purposes, it has major disadvantages. It is
bulky, difficult to move from place to place, and extremely difficult to use for analyzing large
amounts of data. Storing data in computerized form takes much less physical space and destroys
fewer forests, but that is only the beginning. It makes data easier to analyze, easier to copy or
transmit, and easier to display in a flexible format. Compare paper telephone bills with
computerized bills for a large company. The paper bills identify calls but are virtually impossible
to analyze for patterns of inefficient or excessive usage.
Eliminating Unnecessary Variations in the Procedures and Systems:
In many companies, separate departments use different systems and procedures to

perform essentially similar repetitive processes, such as paying employees, purchasing supplies,
and keeping track of inveítories. Although these procedures may seem adequate from a totally
local viewpoint, doing the same work in different ways is often inefficient in a global sense.
Whenever the systems must change with new technology, new regulations, or new business
issues, each separate system must be analyzed separately, often by someone starting from
scratch.
1.5 Objectives of BPR:
When applying the BPR management technique to a business organization the implementation
team effort is focused on the following objectives:
Customer focus:
Customer service oriented processes aiming to eliminate customer complaints. In service

sector and production department customer is the main source of revenue.
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Speed:
Dramatic compression of the time it takes to complete a task for key business processes.
For instance, if process before BPR had an average cycle time 5 hours, after BPR the average
cycle time should be cut down to half an hour.
Compression:
Cutting major tasks of cost and capital, throughout the value chain. Organizing the
processes a company develops transparency throughout the operational level reducing cost. For
instance the decision to buy a large amount of raw material at 50% discount is connected to
eleven cross checking in the organizational structure from cash flow, inventory, to production
planning and marketing. These checking become easily implemented within the cross-functional
teams, optimizing the decision making and cutting operational cost.
Flexibility:
Adaptive processes and structures to changing conditions and competition. Being closer
to the customer the company can develop the awareness mechanisms to rapidly spot the weak
points and adapt to new requirements of the market.
Quality:
Obsession with the superior service and value to the customers. The level of quality is
always the same controlled and monitored by the processes, and does not depend mainly on the
person, who servicing the customer.
Innovation:
Leadership through imaginative change providing to organization competitive advantage.
Productivity:
Improve drastically effectiveness and efficiency.
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1.6 Different BPR Methodologies:
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 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.
The majority of BPR methodologies share common features and steps. In the following
sections we describe a representative sample of these methodologies. In the end we describe the
differences of these methodologies and the value and the importance of each special step in a
BPR effort. Moreover, the main reasons behind the failure of BPR projects are discussed and a
list of factors that should be considered in order a reengineering effort to be successful is
provided. Finally, we discuss how BPR seems to be applied in future.
1.6.1 The Hammer / Champy methodology
Hammer and Champy define BPR as 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”. In fact a BPR effort changes practically
everything in the organization: people, jobs, managers and values, because these aspects are
linked together. Hammer and Champy call these aspects the four points of the business system
diamond, which is depicted in Figure 5.
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Business Processes
Jobs and
Values and Beliefs
Structures
Management and
Measurement Systems
Measurement Systems
Figure 5. The business system diamond
According to them IT plays a crucial role in BPR, especially when it is used to challenge
the assumptions inherent in the work processes that have existed since long before the advent of
modern computer and communication technology. Inductive thinking is needed in order to
recognize the power inherent in modern IT and to visualize its application. This means that
instead of first defining a problem and then seeking and evaluating different solutions to it, it is
more efficient to first recognize a powerful solution and then seek the problems it might solve.
Since, reengineering is about innovation and not automation, one of its most difficult parts is
recognizing the “new” capabilities of technologies.
Hammer and Champy consider poor management and unclear objectives as the main
problems to BPR success, but initially they failed to give adequate consideration to the human
factor. Only recently they acknowledge people‟s resistance as a major obstacle to a successful
BPR undertaking.
Hammer and Champy suggested a methodology for BPR, which was refined by
Champer‟s Consultant Company. The six phases of the methodology are next presented:
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1. Introduction into Business Reengineering
The first step in reengineering is to prepare and communicate the “case for action” and
the “vision statement”. The “case for action” is a description of the organization‟s business
problem and current situation; it presents justification for the need for change. The “vision
statement” describes how the organization is going to operate and outlines the kind of results it
must achieve. This qualitative and quantitative statement can be used during a BPR effort, as a
reminder of reengineering objectives, as a metric for measuring the progress of the project, and
as a prod to keep reengineering action going.
The articulation and the communication of the case for action and the vision statement is
the leader‟s (CEO) responsibility, who should inform firstly the senior management team and
secondly the rest of the organization.
2. Identification of Business Processes
During this phase, the most important business processes are identified and are described
from a global perspective using a set of process maps. Process maps give a picture of the work
flows through the company. They show high-level processes, which can be decomposed into
sub-processes on separate sub-process maps. Process maps are also used as a means of
communication to help people discuss reengineering. The output of this phase is a number of
process maps reflecting how these high-level processes interact within the company and in
relation to the outside world.
3. Selection of Business Processes
It is unrealistic to reengineer all the high level processes of an organization at the same
time. Therefore, it has to be decided which are the processes to be redesigned. This is a very
important part of a BPR effort. Candidate for reengineering are the most problematic processes
those with great impact to customers or processes with more chances to be successfully
reengineered, processes that contribute to organization‟s objectives and so on.
According to an organization‟s strategic objectives more criteria could be defined for

selecting processes for redesign, such as whether a process contributes to the organization‟s
strategic direction, has an impact on customer‟s satisfaction e.t.c.
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4. Understanding of Selected Business Processes
Before proceeding to redesign, the reengineering team needs to gain a better

understanding of the existing selected processes, concerning what they do, how well or how
poorly they perform, and the critical issues that govern their performance. Detailed analysis and
documentation of current processes is not within the scope of this phase. The objective is the
provision of a high level view of the process under consideration, in order the team members to
have the intuition and insight required to create a totally new and superior design.
5. Redesign of the Selected Business Processes
This is the most creative phase of the methodology, because new rules and new ways of
work should be invented. Iimagination and inductive thinking should characterize this phase.
Redesigning a process is not algorithmic or routine and therefore Hammer and Champy suggest
three kinds of techniques that can help reengineering teams to generate new ideas:
As redesign proceeds teams can consider these techniques again to stimulate additional thought.
6. Implementation of Redesigned Business Processes
The last phase covers the implementation phase of the BPR project. Hammer/Champy do
not talk about implementation as much about project planning. They believe that the success of
the implementation depends on whether the five preliminary phases have been properly
performed.
1.6.2.Davenport’s and Short’s methodology
Davenport and Short position IT at the heart of BPR. They recognise the existence of a
recursive relationship between IT capabilities and BPR, meaning that IT should be considered in
terms of how it supports new or redesigned business processes, and recursively business
processes and process improvement should be considered in terms of the capabilities IT can
provide. Despite their emphasis on innovation and technology, they recognise the importance of
organisation and human resource issues as to change management, and suggest the use of
traditional management approaches like planning, directing decision making and
communicating.
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Believing that BPR should be integrated with approaches like Continuous Process Improvement
(CPI) [Reference is needed], Davenport and Short suggest that the redesign effort of an
organisation involve five major steps.
The first three steps are very similar to Hammer‟s methodology. Things differentiate after the
fourth step.
1. Develop Business Vision and Process Objectives
During this step the objectives and the business vision of an organisation are defined. A
business vision implies specific objectives for process redesign, such as: Cost Reduction, Time
reduction, Output Quality, the Quality of Work life and the Quality of Learning.
The objectives are prioritized and stretch targets are set. A redesign effort does not aim at
improving processes‟ performance, so that they contribute to the fulfillment of the vision and the
objectives of the organization.
2. Identify Processes to Be Redesigned
The most important processes are identified and prioritised according to their redesign
potential. Key business processes are identified either by identification and prioritzation of all
processes (exhaustive approach) or by identification of important processes or processes in
conflict with conflict with the business vision and process objectives (high impact approach).
3. Understand and Measure Existing Processes
The functionality of selected process is understood here and their performance is

measured against the specific reengineering objectives. It is important that designers think in an
innovative way and are not restricted or influenced by the analysis of current situation.
4. Identify IT levers
IT is a powerful tool not only for supporting processes but also for creating new process
design options; therefore, it has its own step in process redesign. The authors suggest eight ways
to think about IT capabilities and their organisational impacts, which are summarised in
Table 1.
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Table 1. IT capabilities and their organisational impact
Capability Organisational Impact/Benefit
Transactional IT can transform unstructured processes into routinized

transactions
Geographical IT can transfer information with rapidity and ease across

large distances, making processes independent of
geography
Automation IT can replace or reduce human labour in a process
Analytical IT can bring complex analytical methods to bear on a

process
Informational IT can bring vast amounts or detailed information into a

process
Sequential IT can enable changes in the sequence of tasks in a process,

often allowing multiple tasks to be worked on
simultaneously
Knowledge IT allows the capture and dissemination of knowledge and

management expertise to improve the process
Tracking IT allows the detailed tracking of task status, inputs, and

outputs
Disintermediation IT can be used to connect two parties within a process that

would otherwise communicate through an intermediary
(internal or external)
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5. Design and Build a Prototype of the Process
The final step in a redesign effort is the design of the new process. The actual design of
the new process should be viewed as a prototype and successive iterations should be expected.
Three key factors and tactics are considered in process design and prototype:
 using IT as a Design Tool
 understanding generic design criteria
 creating organizational prototypes
1.6. 3 Consolidated BPR implementation Methodology:
There are various BPR methodologies are available like apart from Hammer/Champy
methodology and Davenport Methodology like Manganelli/Klein Methodology, Kodak
Methodology, Process Analysis and Design Method (PADM) and some more are available
comparison between them shows a similar way of approach which is consolidated below
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Figure 6 : Consolidated BPR implementation Methodology.
In consolidated methodology here are 5 steps and they are explained below
i. Activity #1: Preparing for Reengineering:
Planning and preparation are vital factors for any activity or event to be successful and
reengineering is no exception. There should be a significant need for the process to be
reengineered.
This activity begins with the development of executive consensus, on the importance of
reengineering and the link between breakthrough business goals and reengineering projects. A
mandate for change is produced, and a cross-functional team is established with a plan for the
process of reengineering. While forming cross functional team, steps should be taken to ensure
that the organization continues to function in the absence of several key players. As typical BPR
projects involve cross-functional cooperation and significant changes to the status quo, the
planning for organizational changes is difficult to conduct without strategic direction from the
top. The impact of the environmental changes that serve as the impetus for the reengineering
effort must also be considered in establishing guidelines for the reengineering project. Another
important factor to be considered while establishing the strategic goals for the reengineering
effort is to make it your first priority to understand the expectations of your customers and where
your existing process falls short of meeting those requirements. Having identified the customer
driven objectives, the mission or vision statement is formulated. The vision is what a company
believes it wants to achieve when it is done, and a well-defined vision will sustain a company‟s
resolve through the stress of the reengineering process. It can act as the flag around which to
rally the troops when the morale begins to sag and it provides the yard stick for measuring the
company‟s progress.
ii. Activity #2: Map and Analyze As-Is Process:
Before the reengineering team can proceed to redesign the process, they should
understand the existing process. Although some BPR proponents (in particular Hammer and
Champy) argue against analyzing the current enterprise, saying that it inhibits the creative
process, that might not always hold true. It varies from case to case. While some organizations
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which are in dire straits might go the Hammer and Champy way (attempt a new process design
while totally ignoring the existing processes) most organizations need to map the existing
processes first, analyze and improve on it to design new processes. The important aspect of BPR
(what makes BPR, BPR) is that the improvement should provide dramatic results. Many people
do not understand the value of an As-Is analysis and rather prefer to spend a larger chunk of their
valuable time on designing the To-Be model directly. What follows is an illustration that
illustrates this fallacy.
A large manufacturer spent six million dollars over a period of one year in a bid to
develop a parts-tracking system and was all set to go online. Only then did he realize that he had
totally overlooked a small piece of information – „the mode of transmission of information
between the scheduling staff and the shop floor was through a phone call.‟ But just because this
small yet vital information had not been documented all his efforts added up to naught and the
whole system that he had so painstakingly developed had to be scrapped. Alas! He had
recognized the need for an as-Is analysis, way too late.
The main objective of this phase is to identify disconnects (anything that prevents the
process from achieving desired results and in particular information transfer between
organizations or people) and value adding processes]. This is initiated by first creation and
documentation of Activity and Process models making use of the various modeling methods
available. Then, the amount of time that each activity takes and the cost that each activity
requires in terms of resources is calculated through simulation and activity based costing (ABC).
All the groundwork required having been completed; the processes that need to be reengineered
are identified.
iii. Activity #3: Design To-Be process:
The objective of this phase is to produce one or more alternatives to the current situation,
which satisfy the strategic goals of the enterprise. The first step in this phase is benchmarking.
“Benchmarking is the comparing of both the performance of the organization‟s processes and the
way those processes is conducted with those relevant peer organizations to obtain ideas for
improvement.” The peer organizations need not be competitors or even from the same industry.
Innovative practices can be adopted from anywhere, no matter what their source.
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Having identified the potential improvements to the existing processes, the development
of the To-Be models is done using the various modeling methods available, bearing in mind the
principles of process design. Then, similar to the As-Is model, we perform simulation and ABC
to analyze factors like the time and cost involved. It should be noted that this activity is an
iterative process and cannot be done overnight. The several To-Be models that are finally arrived
at are validated. By performing Trade off Analysis the best possible To-Be scenarios are selected
for implementation.
iv. Activity #4: Implement Reengineered Process:
The implementation stage is where reengineering efforts meet the most resistance and
hence it is by far the most difficult one. If we expect that the environment would be conducive to
the reengineering effort we are sadly mistaken. The question that confronts us would be,‟ If BPR
promises such breath taking results then why wasn‟t it adopted much earlier?‟ We could expect
to face all kinds of opposition - from blatantly hostile antagonists to passive adversaries: all of
them determined to kill the effort. When so much time and effort is spent on analyzing the
current processes, redesigning them and planning the migration, it would indeed be prudent to
run a culture change program simultaneously with all the planning and preparation. This would
enable the organization to undergo a much more facile transition. But whatever may be the
juncture in time that the culture change program may be initiated, it should be rooted in our
minds that „winning the hearts and minds of everyone involved in the BPR effort is most vital for
the success of the effort. Once this has been done, the next step is to develop a transition plan
from the As-Is to the redesigned process. This plan must align the organizational structure,
information systems, and the business policies and procedures with the redesigned processes.
“Rapid implementation of the information system that is required to support a reengineered
business process is critical to the success of the BPR project. The IDEF models that were created
in the As-Is can be mapped to those created during the To-Be and an initial list of change
requirements generated. Additional requirements for the construction of the To-Be components
can be added and the result organized into a Work Breakdown Structure (WBS). Recent
developments in BPR software technologies enable automatic migration of these WBS
activity/relationships into a process modeling environment. The benefit here is that we can now
define the causal and time sequential relationships between the activities planned.” Using
prototyping and simulation techniques, the transition plan is validated and its pilot versions are
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designed and demonstrated. Training programs for the workers are initiated and the plan is
executed in full scale.
V Activity #5: Improve Process Continuously:
A process cannot be reengineered overnight. A very vital part in the success of every
reengineering effort lies in improving the reengineered process continuously. The first step in
this activity is monitoring. Two things have to be monitored – the progress of action and the
results. The progress of action is measured by seeing how much more informed the people feel,
how much more commitment the management shows and how well the change teams are
accepted in the broader perspective of the organization. This can be achieved by conducting
attitude surveys and discrete „fireside chats‟ with those initially not directly involved with the
change. As for monitoring the results, the monitoring should include such measures as employee
attitudes, customer perceptions, supplier responsiveness etc. Communication is strengthened
throughout the organization, ongoing measurement is initiated, team reviewing of performance
against clearly defined targets is done and a feedback loop is set up wherein the process is
remapped, reanalyzed and redesigned. Thereby continuous improvement of performance is
ensured through a performance tracking system and application of problem solving skills.
Continuous improvement (TQM) and BPR have always been considered mutually exclusive to
each other. But on the contrary, if performed simultaneously they would complement each other
wonderfully well. In fact TQM can be used as a tool to handle the various problems encountered
during the BPR effort and to continuously improve the process. In corporations that have not
adopted the TQM culture as yet, application of TQM to the newly designed processes should be
undertaken as a part of the reengineering effort.
1.7 Key Success Factors for BPR:
1.Top Management Sponsorship:
Major business process change typically affects processes, technology, job roles and
work place culture. Significant changes to even one of these areas require resources, money, and
leadership. Changing them simultaneously is an extraordinary task. If top management does not
IDRBT Page 19
provide strong and consistent support , most likely one of these three elements will be present
over the life of the project, severely crippling the chance for success.
2. Effective communication
Effective communication is considered a major key to successful BPR-related change efforts.

Communication is needed throughout the change process at all levels and for all audiences even
with those not involved directly in the re-engineering project. Effective communication between
stakeholders inside and outside the organisation is necessary to market a BPR program and to
ensure patience and understanding of the structural and cultural changes needed as well as the
organisation's competitive situation. Communication should take place frequently and in both
directions between those in charge of the change initiatives and those affected by them.
Communication should be open, honest, and clear, especially when discussing sensitive issues
related to change such as personnel reductions
3. An adequate job integration approach
Several researchers emphasize that designing and implementing an adequate organisational

human resources infrastructure is important to a BPR project's success. Job and labor integration
(case worker) is the most appropriate approach of human resources design that supports the
process-based organisational structure rather than a function-based one. When individuals within
a process perform a series of tasks efficiently, product quality, processing time, and cost are all
going to improve. However, the move to integrate human resources architecture necessitates a
careful consideration of all related organisational changes.
4. Adequate resources
Adequate resources and sufficient budget allocated properly are important for a successful BPR
project.
5. Appropriate use of methodology
Establishing a disciplined approach for BPR and using a sound methodology are prerequisites for
BPR success. A BPR methodology should be designed or selected creatively to satisfy the
IDRBT Page 20
current needs of the organization. Adequate customization of available BPR methodologies

determines the level of comprehensiveness and effectiveness that a new customized BPR
methodology can reach.
6. Effective BPR teams
Cross-functional BPR teams are a critical component of successful BPR implementation. Teams
should be adequately composed. Team members should be experienced in variety of techniques.
Teams should be made up of people from both inside and outside the organisation. The
determinants of an effective BPR team are as follows: competency of team members, their
credibility within the organisation and their creativity, team empowerment, motivation, effective
team leadership, the training of members in process mapping and brainstorming techniques,
proper organisation of the team, complementary skills among team members, adequate size,
interchangeable accountability, clarity of work approach, and specificity of goals.
7. Appropriate job definitions and allocation of responsibilities
As BPR results in a major structural change in the form of new jobs and responsibilities, it
becomes a prerequisite for successful implementation to have formal and clear descriptions of all
jobs and responsibilities that the new designed processes bring along with them.
8.Factors related to BPR project management
Successful BPR implementation is highly dependent on an effective BPR programme

management which includes adequate strategic alignment, effective planning and project
management techniques, identification of performance measures, adequate resources, appropriate
use of methodology, external orientation and learning, effective use of consultants , building
process vision, effective process redesign, integrating BPR with other improvement techniques,
and adequate identification of the BPR value.
IDRBT Page 21
2. Retail Banking:
2.1 Introduction to Retail Banking:
All over the world, there is a shift in the economy from the manufacturing to the service
sector. The contribution of banking to the service economy is duly recognized. Banking industry
includes a number of businesses such as corporate banking, investment banking, wealth
management, capital market etc.
Retail banking is another segment of the banking industry. It is typical mass- market
banking characterized by a large customer base and a large volume of transactions. There is a
high level of co-operation between banks, retailers, customers and consumers in this segment.
Retail Banking has been the new focus of the banking industry across the world. The
emergence of new economies and their rapid growth has been the most important contributing
factor behind this resurgence in Retail Banking. Changing lifestyles, fast improvement in
information technology, other service sectors and increasing levels of income have contributed to
the growth of retail banking in countries like India that are developing at a good pace. In India
the Retail Banking scenario has been the market changing from a seller‟s market to a buyer‟s
market.
Retail banks offer services like account opening, credit card, debit card, ATM, internet
banking, phone banking, insurance, investment, stock broking and so on.
Retail banking refers to the dealing of commercial banks with individual customers, both
on liabilities and assets sides of the balance sheet. Fixed/current/saving accounts on the liabilities
side, and mortgages loans (e.g, personal, housing, auto and educational on the assets side, are the
important products offered by banks. Related ancillary services include credit cards or depository
services. Retail banking refers to provision of banking services to individuals and small business
where the financial institutions are dealing with large number of low value transactions. This is
in contrast to whole sale banking where the customers are large, often multinational companies,
governments and government enterprises and the financial institution deal in small number of
high value transaction.
IDRBT Page 22
Retail banking can be defined as---
“Retail banking is typically mass – market banking where individual customers use local
branches of larger commercial banks. Services offered include savings and checking accounts,
mortgages, personal loans, debit cards, credit cards and so”.
The concept of Retail Banking is not new to banks but is now viewed as an important and
attractive market segment that offers opportunities for growth and profits. Retail banking and
retail lending are often used as synonyms but in fact, the later is just the part of retail banking. In
retail banking all the needs of individual customers are taken care of in a well – integrated
manner.
Retail banking in the country is characterized by multiple products, multiple channels and
multiple customer groups. This multiplicity of the roles to be played by the retail bankers adds to
the excitement as well as the challenges faced by the bankers.
Multiple Products
The products included in retail banking are--
 various types of deposits/accounts.
 Credit and debit cards
 Loans (Personal, Auto, Housing etc.)
 Insurance, mutual funds etc.
Multiple channels of distribution
 Internet banking
 Mobile banking
 Call centers
Branches
IDRBT Page 23
Multiple Customer Groups
 Individual customers
 Petty businesses
 Small and Medium Enterprises (SMEs)
The Indian Banks are competing with one another to grab a pie of the retail banking
sector, which has tremendous potential as retail loans constitute only 8 % of GDP in India,
whereas their percentage is about 35 in other Asian economies.
Retail banking environment today is changing fast. The changing customer demographics
demands to create a differentiated application based on scalable technology, improved service
and banking convenience. Higher penetration of technology and increase in global literacy
levels has set up the expectations of the customer higher than never before. Increasing use of
modern technology has further enhanced reach and accessibility.
Retail Banking as a business model is adopted by all the banks in India on account of
multiple comfort factors for the banks viz. acquisition of a huge customer base, multiple product
offerings, better pricing and profitability, scope for cross selling and up selling financial and
beyond financial products for increased per customer revenue and of course better risk
proposition. With the changing paradigm of technology as the driver for retail banking
explosion, banks are embracing different strategies by redesigning their conventional business
silos, re-engineering existing products and inventing products, services, channels, relationships
to increase the share of the customers' wallet.
2.2 Functional Area of Retail Banking:
Retail Banking Service Delivery:
This functional area refers to the provision of financial services to individual and small
business in order to satisfy their financial needs through different channels.
IDRBT Page 24
Retail Banking Operations & Support:
It refers to the provision of back-office operational services and fulfillment for retail
banking business units in order to support them to deliver quality service to customers.
Credit Management:
This functional area encompasses retail credit strategy formulation, credit policy
establishment and execution, and credit risk management of retail banking at the more
sophisticated decision level while the acts of gathering, preparing and analyzing all types of
retail credit information for approval, renewal and extension to ensure loan exposure is adhered
to the bank‟s credit guidelines are also included in the day to day operation level of activities.
Compliance & Risk Management:
By observing the Banking Ordinance and other legal and statutory requirements
including global trend and local practices, it ranges from the initiatives of banks in formulating
internal policies to ensure banks‟ activities are in compliance with the regulations at the decision
making level to the acts of conforming to the internal rules and standard operation procedure at
the working level.
Technology Management:
With an aim to improve sales and service productivity; raise channel efficiency; facilitate
customer acquisition and retention; as well as develop innovative products to ensure quality
service delivery, this functional area refers to the operation and control of hi-tech equipment or
system to complete job requirements in a smooth and effective manner.
Product Development & Brand Marketing:
It refers to activities related to the building of the branding or corporate image of a bank
and the development of products based on the needs of bank customers.
Quality Management:
IDRBT Page 25
This includes the activities which are directed to ensure banking products and services
provided can meet the needs and expectations of different stakeholders.
Sales & Relationship Management:
With a customer-centric aspiration, this functional area represents the deeds of

introducing, demonstrating, recommending, promoting and cross-selling all retail banking and
other related services and products to meet customer needs via different channels.
Strategic Business Management
This functional area refers to the initiatives to keep up with the local and global economic
Development, especially the movements in China so as to identify development potential for the
bank.
2.3 Retail Banking in India:
In India banks have classified into three major categories according to their management
and the strategies followed by them are different. Those are mainly Public sector banks which
run under government in India most of the business carried by these banks largest players like
SBI and its subsidiaries are also comes under this, other banks which comes under this include
Indian Bank, Union bank, Bank Of Baroda and many other banks are there. These banks
consider profit maximization as the least priority thus it making affordable and accessible to the
least income group people.
Another sector is Private Sector banks which lead by ICICI Bank, Axis Bank and HDFC
bank. These banks adopt technology changes rapidly and their main motive is profit
maximization. They will deliver world class services to those who can effort and provide
customized products which caters the customers need. Other banks in this sector include Kotak
Mahindra Bank, Federal Bank..Etc.
Foreign banks which are headed abroad open its branches in India to provide services to
HNIs and its corporate clients. These banks give world class service. To ensure the reliability of
this institutions RBI and other regulatory bodies put some guide lines for this banks. In this
sector Citi Group and Standard Charted Banks are the leaders.
IDRBT Page 26
These all banks are committed to provide retail banking services to consumers after
analyzing the annual reports of these firms, there is a list of banks and it‟s Assets, Liabilities and
Assets + Liabilities is given below
Each banks Retail segment Asset, Liability and Asset & Liability as on March 2013,
Bank Asset Liability Asset & Liability
(in Crores) (in Crores) (in Crores)
SBI 5,96,699 7,29,633 13,26,332
HDFC Bank 1,38,001 2,34,968 3,72,970
PNB 1,05,217 93,789 1,99,006
Oriental Bank of Commerce 86,904 86,904 1,73,808
IDBI Bank 83,990 1,26,489 2,10,479
Canara Bank 78,711 1,56,300 2,35,011
Bank of India 78,292 74,860 1,53,152
Axis Bank 75,261 1,16,296 1,91,557
Bank of Baroda 73,229 68,950 1,42,180
ICICI Bank 72,975 2,04,318 2,77,293
Indian Overseas Bank 63,752 62,625 1,26,377
Central bank of India 56,488 68,093 1,24,581
Kotak Mahindra Bank 52,890 48,027 1,00,917
IDRBT Page 27
Indian Bank 51,558 46,170 97,728
Syndicate Bank 48,005 45,950 93,955
UCO Bank 39,691 42,734 82,425
State Bank of Travancore 35,195 47,226 82,421
IndusInd Bank 34,808 19,929 54,737
Allahabad Bank 34,527 32,810 67,336
Andhra Bank 33,021 63,207 96,227
Bank of Maharashtra 28,171 26,181 54,352
State Bank of Patiala 26,358 33,095 59,453
SBBJ 25,537 22,727 48,264
Federal Bank Limited 23,203 21,517 44,720
Vijaya Bank 23,172 21,860 45,032
Jammu & Kashmir Bank 19,025 40,919 59,944

Ltd.
United Bank of India 18,490 18,490 36,980
Karur Vysya Bank 18,299 16,040 34,339
State Bank of Mysore 16,058 15,739 31,797
South Indian bank 14,651 13,857 28,508
ING Vysya Bank Limited 14,107 24,585 38,692
Punjab& Sindh Bank 13,977 13,215 27,192
IDRBT Page 28
Karnataka Bank Limited 11,797 10,990 22,787
City Union Bank Ltd. 10,658 9,771 20,429
Shri Laxmi Vilas bank 6,709 12,630 19,339
Catholic Syrian Bank 6,365 8,711 15,076

Limited
YES Bank 4,563 13,780 18,343
DCB 4,331 7,134 11,465
Nainital Bank 1,717 1,594 3,311
Ratnakar Bank Ltd. 881 3,331 4,212
After analyzing the data above I found out top 10 leaders retail banks leaders considering
their revenue below
Bank Assets Bank Liabilities

State bank of India 596699 State bank of India 729633
HDFC Bank 138001 HDFC Bank 234968
Punjab National Bank 105217 ICICI Bank 204318
Oriental Bank of Commerce 86904 Canara Bank 156300
IDBI Bank 83990 IDBI Bank 126489
Canara Bank 78711 Axis Bank 116296
Bank of India 78292 Punjab National Bank 93789
Axis Bank 75261 Oriental Bank of Commerce 86904
Bank of Baroda 73229 Bank of India 74860
ICICI Bank 72975 Bank of Baroda 68950
IDRBT Page 29
Bank Assets+Liabilities
State bank of India 1326332
HDFC Bank 372970
ICICI Bank 277293
Canara Bank 235011
IDBI Bank 210479
Punjab National Bank 199006
Axis Bank 191557
Oriental Bank of Commerce 173808
Bank of India 153152
Bank of Baroda 142180
After the analysis State Bank of India stood top in all the three departments with having
assets of 596699 Cr. liability of 729633 Cr and total asset & liability of 1326332 Cr.
IDRBT Page 30
3. Business Process Reengineering for Retail Bank
Retail bank is a major segment in banking industry in Indian scenario where most of the
population is using traditional delivery channels like branch and ATMs which are costlier when
compare with other alternate channels. The process time which could be taken to perform a
operation is little higher in traditional channels which can reduce customer satisfaction.
Other foreign players and private banks are entering into the market which are providing
highly customer centric operations can be a threat to banking giant like SBI. So entire retail
banking sector had undergone numerous changes which changed the entire banking industry.
Today‟s banks are quite different from the banks being held at 20 years ago.
Let us consider a scenario how BPR is implemented in SBI which is a leader in retail
bank sector in India with which we can analyze the impact of BPR in retail bank sector.
3.1 BPR in State Bank of India:
The State Bank of India is the oldest and largest bank in India, with more than $250
billion (USD) in assets. It is the second-largest bank in the world in number of branches; it
opened its 10,000th branch in 2008. The bank has 84 international branches located in 32
countries and approximately 8,500 ATMs. Additionally, SBI has controlling or complete interest
in a number of affiliate banks, resulting in the availability of banking services at more than
14,600 branches and nearly 10,000 ATMs.
SBI traces its heritage to the 1806 formation of the Bank of Calcutta. The bank was
renamed the Bank of Bengal in 1809 and operated as one of the three premier "presidency"
banks (the presidency banks had the exclusive rights to manage and circulate currency and were
provided capital to establish branch networks). In 1921, the government consolidated the three
presidency banks into the Imperial Bank of India. The Imperial Bank of India continued until
1955, when India's central bank, the Reserve Bank of India, acquired the majority interest in the
bank and changed its name to the State Bank of India (SBI).
In 1959, the Indian government passed the State Bank of India Act, resulting in the
acquisition (majority shareholding) of eight state-affiliated banks and the creation of the State
IDRBT Page 31
Bank of India Group (SBI Group). The SBI itself is now majority owned by the Indian
government, which purchased the shares held by the Reserve Bank of India.
Unlike private-sector banks, SBI has a dual role of earning a profit and expanding
banking services to the population throughout India. Therefore, the bank built an extensive
branch network in India that included many branches in low-income rural areas that were
unprofitable to the bank. Nonetheless, the branches in these rural areas bought banking services
to tens of millions of Indians who otherwise would have lacked access to financial services. This
tradition of "banking inclusion" recently led India's Finance Minister P. Chidambaram to
comment, "The State Bank of India is owned by the people of India."
A lack of reliable communications and power (particularly in rural areas) hindered the
implementation of computerization at Indian banks throughout the 1970s and 1980s. During this
period, account information was typically maintained at the local branches with either semi
automated or manual ledger card processing. During the 1990s, the Indian economy began a
Period of rapid growth as the country's low labor costs, intellectual capital and improving Tele
communications technology allowed India to offer its commercial services on a global basis.
Objective of BPR
 To enhance customer service levels and experience by simplifying processes and offering
multiple delivery channels
 To build deep and lasting relationship with customers
 To improve productivity through increase of business and profit per employee
 To Free up time of Branch and Branch Manager to focus on sales and marketing
 To acquire new quality customers
Pillars of BPR
i) Branch Re-design
ii) Centralised Processing Centers
iii) Alternate Delivery Channels
iv) Customized products
IDRBT Page 32
i) Branch Re-design:
As a part of BPR initiative taken in bank branch has been redesigned to cater the
needs of customer in effective way and some new job roles has been introduced.
Types of Branches after Redesign
 Core Sales and Service Branch (SSB)
 A self assisted outlet- Mini Branch operated by 1-2 staff and supported by a full suite
of alternative channel access devices (ATMs, call center link, internet kiosk etc.)
 Sales focused outlet located in high traffic areas
 Product specific outlet such as home loan center, locker center
Role of Branch Manager
 Spend 60% of his time in acquiring valuable customers and up-selling/cross selling to top
customers of the branch
Role of Manager (Branch Operation)
 Allocation of staff duties to ensure that branch operates normally despite leave
 Complete responsibility for maintaining desired customer service levels in the branch
(e.g., transaction time, waiting time for customers etc.)
 Authorizing transactions beyond the power of Single Window Operators
 Handle customer grievances on service which cannot be solved by Single Window
Operators/Grahak Mitra
 Ensure proper upkeep of branch premises
 Manage vendors and suppliers of the branch to ensure that there are no disruptions in
branch work
 Ensure that staff administrative matters including leave records and staff records are
in order
 Follow-up to ensure that all pending work in the Branch like IOA memos, un-
reconciled GLIF entries are completed promptly
 Joint custodian of vault and ATM
IDRBT Page 33
Role of Customer Relation Officer (CRO)

 To cross-sell to all walk-in customers of the Branch,
 To spend at least 20% time in proactive cross-selling products to the top customers
 To handle transactions where there is a significant interaction and an opportunity to
cross sell to the customer.
Role of Single Window Operator:
 To be a Single touch-point for customers for transaction related needs viz. cash receipt
and deposit, pass book update, Draft/BC issuance, Government Challans, Accepting
ATM card requests
 Grahak Mitra will support the single window operators by managing queues, provide
forms/vouchers to customers and help customers with use of alternate channels
Role of Relationship Manager (Personal Banking) :
 To provide relationship based services to top 300 (approximately) high value „P‟
segment customers
 To get new high value customers for the Bank
ii) Centralised processing centers:

In 2002, bank management approved the KPMG-recommended strategy for a new IT
environment that included the implementation of a new centralized core banking system. This
effort would encompass the largest 3,300 branches of the bank that were located in city and
suburban areas. The technology advancement allowed bank to establish centralised processing
center which reduced TAT. Some of the central processing centers are given below
 Liability Central Processing Centre (LCPC)

 Retail Asset Central Processing Centre (RACPC)
 Small and Medium Enterprise City Credit Centre or SMECCC
 Centralised Pension Processing Cell (CPPC)
 Trade Finance Central Processing Centre (TFCPC)
 Stressed Assets Resolution Centre (SARC)
IDRBT Page 34
 Currency Administration Cell (CAC)

 Centralised Clearing Processing Centre (CCPC)
 Document Archival Centre (DAC)
 Centralised Settlement & Reconciliation of PPF transactions (CSRP)
 Home Loan Sales Team (HLST)
` Inward Remittance Cell (IRC)
 Mid-Corporate Loan Administration Unit (MCLAU)
Because of this banks can specify the exact TAT for each operation. List of TAT for asset
based product for the bank is given below
 Home Loan – 6days

 Education Loan- 5days
 Mortgage & Rent Plus- 6 days
 Auto Loan – 2days
iii) Alternate Delivery Channels:

Delivery channel is where a customer gets the service from the bank where he can
perform a banking operation. Traditionally in banking branch is the only delivery channel but
because of technology changes, new channels called alternate channels emerged which includes
ATMs, internet banking, Mobile banking, POS (Point Of Service), call center and social media
banking.
The main advantage of migrating to other channels is cost involved with that. According
to studies when a customer walks-in to a bank to withdrawal money, cost incurred to bank is as
high as 200 Rs per transaction where 20 Rs in ATM and 4-6 Rs with other channels. Along with
this cost benefit banks can also earn income from other banks by transactions happened that
through their alternate channels.
An alternate channel also improves customer satisfaction because one can use banking
services at his convenient time and place.
IDRBT Page 35
 The steps to be followed in making a new distribution channel successful:
o Understand customers‟ current channel/transaction behavior and their underlying

attitude;
o Use sophisticated experimental customer research to assess the economic impact of
tactics designed to change that behavior;
o Develop an integrated channel migration plan which blends economic and non-
economic incentives to ensure that right initiatives are targeted at the right customers;
o Protect sales effectiveness by utilizing the ability of non-branch channels to select
amongst prospects and differentiate the marketing message;
o Design non-branch channels to emphasize personalized interaction to counteract
decreased loyalty among remote customers;
o Develop tracking mechanisms to allow you to assess and revise your migration
strategy on an ongoing basis.
Delivery channel gains mass acceptability and is user friendly; the bank can use it to
cross-sell it‟s as well as others‟ products. For example, banks have already started dispensing
railway tickets, movie tickets through their ATMs. In future a bank‟s ATM would function like
a kiosk delivering more of non-cash transactions, thereby simultaneously reducing the fixed and
operating cost of ATM.
iv) Customized Products:

BPR initiated SBI to made customized product to the customer, initially traditional
banking products like Savings Account, Current Account and other products were available to
the customers.
As market is evolving BPR initiated banks to provide different products like
credit card, insurance products, mutual funds and DeMAT accounts to customers made
available.BPR made banks a Financial Super Market which made which enhanced customer
satisfaction and improved revenue through fee.
IDRBT Page 36
4. IMPACT OF BPR ON RETAIL BANKING:

To know the impact of BPR on Retail banking I conducted two surveys for both
customers and bankers in which 48 customers and 38 bankers were participated. . We have
categories their responses and showing them in graphically. Following are the responses of
customers and employee.
Customers:
Customer Profile:
Gender
29%
Male
Female
71%
Among the respondents 71% of them are male and 29 % of them are female.
Type of bank
Public Private
21%
79%
Among the respondents 79% of the people belong to Public sector bank rest are
from Private sector banks.
IDRBT Page 37
Age
6% 4% 23% Less than 21
22-35
67% 36-55
55 and above
Most of the respondents are of age between 22-35 years followed by younger people.
6% Account maintain
6%
0-3 Years
50% 3-8 Years
38% 8-15 Years
50% of the total respondents are maintaing account from 0-3 years 38% are maintaing in
3-8 years. Among the respondents 63% of them use banking services less than 2 times 31% 2-5
times and 6% are more than 5 times per week.
Use of Banking
6%
31% 0-2 times

63% 2-5 times
5+ times
IDRBT Page 38
PRODUCT MIX:
Services used
Savings
2% Account
16%
Current
9% Account
55% DeMat
7%
6% Account
5% Loans
Among the respondents, most of them are using savings accounts and there is
much scope to cross sell to customers.
Product Satisfaction
4% 0%
17% Strongly Agree

15%
Agree
Neutral
Dis agree
Strongly diagree
64%
81% of the respondents are satisfied with product mix where only 4% feel that
there can be still some chance for further advancement.
IDRBT Page 39
Alternate delivery channels:
Delivery channel
50
45
40
35
30
25
20 Delivery channel
15
10
5
0
Branch ATM Internet Mobile SMS Call Home POS
Banking Banking Banking Banking Center Banking
ATM is the highest used channel followed by Internet Banking and Branch
Banking. It clearly shows that customers are moved from traditional Branch Banking to other
alternatechannels.
90
80
70
Mobile Banking
60
POS
50
Internet Banking
40
Call Center
30 ATM
20 Branch Banking
10
0
Strongly Agree Agree Neutral Disagree Strongly
disagree
IDRBT Page 40
With overall alternate channels most of the customers are satisfied.
Mean and standard deviation is calculated to display the overall measure, for this
a scale of 1-5 is taken where 1 is lower rating and 5 is higher rating.
Delivery Channel Mean Standard Deviation

Branch Banking 3.208 1.254
ATM 3.875 1.082
Call center 2.79 1.66
Internet Banking 3.729 1.348
POS 3.062 1.137
Mobile Banking 3 1.14
From the above table we can conclude that ATM and Internet banking are most
user friendly to the customer where as call centers and mobile banking can be improved.
Satisfied with alternate channels

4% 0%
Strongly Agree
15% 19%
Agree
Neutral
Disagree
62% Strongly Disagree
81% of total customers are satisfied with the alternate channels provide by their
bank. It improves customer satisfaction and reduces cost.
IDRBT Page 41
TAT with respect to Alternate channels
20
18
16
14
12
ATM
10
Internet Banking
8
Call center
6 Mobile banking
4
2
0
Strongly Agree Agree Neutral Disagree Strongly
disagree
With alternate channels, TAT of the operation has increased drastically but there
is some scope to increase TAT with respect to call center and Mobile banking.
Switch
19%
Yes
No
81%
81% of the customers are satisfied with the survey and they don‟t want to switch to other bank.
IDRBT Page 42
Switching factors
Relation with banker
Brand
Technolgy advancement
No.of products Switching factors
Convience
other
0 5 10 15 20 25 30
If bank want to attract more customers from other banks they can concentrate on
above parameters at the same they need to compete with other banks for customer retention.
IDRBT Page 43
Bankers Profile:
Age
21% 18-27
36%
28-36
43% 37-58
Gender
21%
Male
79% Female
Type of Bank
33% Public Sector

67% Private sector
IDRBT Page 44
How long
7% 14% 0-3 Yrs

3-8 Yrs
50%
9-15 Yrs
29%
15+ years
Bankers who responded to survey are 34 members, among them 36% of them
belong to age group of 18-27, 43% of them belongs to 28-35, 21% of them belongs to 36-58
years.
67% of the bankers belongs to public sector remaining 33% people belongs to
private sector banks. 50% of them working in the bank from 0-3 years 29% of them working
from 3-8 years 7% of them working from 9-15 years, rest 14% are working in the bank more
than 15 years.
IDRBT Page 45
Findings from the survey:
i) 53% of the bankers think that introduction of alternate channels has decreased customer
density in the branch, thus allowing them to give superior customer service.
Customer density
0%
15% 15% Strongly Agree

Agree
Neutral
31% Disagree
39%
Strongly Disagree
46% of the bankers believe that because of BPR customer density in banks have
reduced with that they can deliver superior services which increases customer satisfaction.
25
20
15
10
0
Strongly Agree Agree Neutral Disagree Strongly Disagree
Working Hours Work life balance Cross sell
IDRBT Page 46
ii) BPR initiatives taken in the bank have impacted bankers a lot among them bank
working hours, work life balance and product cross sell are three main aspects. The above graph
tells how each parameter impacted banker is given.
Most of the bankers feel that BPR increased their working hours and they are not
happy with that but surprisingly most of them are feeling neutral about work life balance.
iii) According to bankers how BPR impacted following parameters like customer
satisfaction, Business improvement, transparency, Security and product mix is given in a chart.
Impaact ofBPR
20
15 Customer satisfaction
Business improvement
10
Transparency
5
Security
0 Product mix
Strongly Agree Neutral Disagree Strongly
Agree Disagree
According to bankers BPR increased customer satisfaction, business improvement,

transparency, security, and product mix.
IV) 72% of the employees were able to adopt the changes that were happening and they will
easily adopt further changes if happens.
Adoptability
28%
Yes
No
72%
IDRBT Page 47
Comparing TAT of different operations among customers and bankers:
To find out the TAT of different operations mean is considered
4.5
3.5
2.5
2 Customer
Banker
1.5
0.5
0
Account Issue of Branch Tx Clearing Loans Problem
Opening cheque
Both bankers and customers feel that BPR improved TAT of the operations. But in all
cases bankers are more satisfied than bankers and there is a huge gap in clearing.
Operation Customer Mean Bankers Mean Bankers SD Customer SD

Account Opening 3.458 3.714 1.069 1.147
Issue of cheque 3.312 3.571 1.016 1.055
Branch Tx 3.375 3.857 0.770 1.178
Clearing 3.312 4 0.679 0.878
Loans 2.77 3.5 0.854 1.015
Problem resolve 2.93 3.785 1.05 1.039
IDRBT Page 48
Bankers feedback on BPR in Retail banking:
 Technological change is a ongoing process.

 It is around global market where results near to real time to serve business purpose
 It has increased the expense on technology to great extent due to introduction of
technology in unwanted and less needed areas, which in turn has reduced the
profitability.
 Surely it has reduced the wastage of man power on unproductive activities like interest
calculation, jotting and tallying etc.
 New jobs have come up with technology
 Communication has become easy.
IDRBT Page 49
5. CONCLUSION
Retail bank which is one of the profitable segment in banking sector had changed because of
BPR. In this report I have tried to conclude how it affected customers, bank employee and bank
basing on reports of two questionnaires which are distributed to bankers and customers.
Customer Perception:
Customers are satisfied with the number of products available with the bank they are
even using non-banking services like insurance and mutual funds through banks only. Most of
the customers have migrated to other alternate channels; ATMs and Internet banking are of top
priority and they are happy with these services. Access to Mobile banking and call centers need
to be improved as they are emerging services especially in countries like India.
Bankers Perception:
Most of the bankers are accepting the changes that are happening in the industry but
they feel that these advancements increased their work timings which effected work life balance.
BPR improved their product mix with which they can cross sell their products. Migration to
other alternate channels decreased customer density increased transparency, security which
increases customer satisfaction and helped to improve business.
Banks Perception:
Migration to other alternate channels reduces cost by 90% thus profits of the banks
can be improved. To cater customer needs banks tied up with other players to provide
customized products. Cross selling these products has given a chance to gain fee based income.
IDRBT Page 50
7/3/2014 Business Process Reengineering in Retail Banking
Edit this form
Business Process Reengineering in

Retail Banking
* Required
1.Age *
18-27
28-36
37-45
46 and above
2. Gender *
Male
Female
3. Which type of bank you are working ?

Public Sector Bank
Private Sector Bank
Regional Rural Bank
Foreign Bank
Other:
4. How long you have been working in BFSI sector ?

0-3 Years
3-8 Years
9- 15 Years
15- 24 Years
25+ Years
5. Because of alternate delivery channels customer density in branches have reduced
1 2 3 4 5
Strongly Disagree Strongly Agree
https://docs.google.com/forms/d/17yKEhkCTBglUOHiIVsTEVnePpksGftH3I3NbsQFM5b8/viewform 1/4
6. Rate how technology in banking changed following parameters ?

(Technology changes like Core Banking Services, Computerization.. etc, 1 for lowest
and 5 for highest)
1 2 3 4 5
Customer
satisfaction
Business
improvement
Transparency
Security
Product
diversification
7. Because of your bank's strategic alliances with other players made you to cross sell
non-banking financial products.
(Like insurance, mutual funds.. etc)
1 2 3 4 5
Strongly disagree Strongly agree
8. The use of technology has decreased working hours of your bank ?
1 2 3 4 5
9. The use of technology has improved work life balance ?
1 2 3 4 5
10.Rate how technology reduced TAT(Turn Around Time) in the following operations
(1 is for lowest and 5 is highest )
1 2 3 4 5
Account
opening
Issue of cheque
book
Deposit and
withdrawal at
bank
Cheque clearing
Sanction and
disbursement of
loan
Resolving a
problem
11. Is there still some scope for further advancements in your bank with respect to
technology ?
1 2 3 4 5
12. Were you able to adopt the new technological changes that were happening in
your bank ?
Yes
No
13. Your bank's product mix caters each and every financial need of your customer ?
1 2 3 4 5
14.Customer migration to other delivery channels has increased your bank's

profitability
1 2 3 4 5
15.Give your comments on technological changes that changed the BFSI sector ?
Submit
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Edit this form
Business Process Reengineering in

Retail Banking
* Required
1. Gender *
Male
Female
2.Age *
< 21 Years
22-35 Years
36-55 Years
55 Years and above
3. With which type of bank you are maintaing your account? *

Public Sector Bank
Private Sector Bank
Foreign Bank
RRB
No Account
4. Since How long you are maintaing your account with your bank *
less than 1 Years
1-3 Years
3-8 Years
8-15 Years
15+ Years
5. What are the services you are using with your bank ? *
(Tick any No.of the products)
Savings Account
Current Account
DeMat Account
Home Loan
https://docs.google.com/forms/d/1JshKtTM37ocZCF73pNE9LxDBEk7QlluoXq7CTYI7bBs/viewform 1/5
Auto Loan
Personal Loan
Credit Card
Mutual Funds
SIPs
Insurance Products
Fixed Deposits
Other:
6. Does your bank's product mix satisfy your need ? *

Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
7. What are different delivery channels you use ? *

(Tick any No.of channels)
Branch Banking
ATMs
Internet Banking
Mobile Banking
SMS Banking
Call Center
Home Banking
POS
Other:
8. Rate each delivery channel according to your convenience and ease of usability ? *
(Give score according to your preference, 1 is lowest and 5 is highest)
1 2 3 4 5
Branch Banking
ATM
Call center
Internet
Banking
POS
Mobile Banking
9.Is your bank is providing with enough no.of alternate channels *

Strongly Agree
Agree
Disagree
Strongly Disagree
10. How you will rate your Bank in providing services ? *
1 2 3 4 5 6 7 8 9 10
Low High
11. How often you use banking services ? *

(Except balance enquiry and cash withdrawal in ATMs)
less than 2 times in a week
2-5 times a week
more than 5 times
12. Would you like to switch to another bank ? *

Yes
No
13.If possible what are the factors that forces you to change to another bank ? *
Lack of Service
convenience
More No.of Products
Technological advancement
Brand value
Relation with Banker
Other:
14. Rate your satisfaction with TAT(Turn Around Time) of each operation. *
(1 is the lowest and 5 is the highest)
1 2 3 4 5
Account
opening
Issue of cheque
book
Deposit and
withdrawal at
branch
withdrawal at
ATM
Internet based
transactions
Cheque clearing
sanctioning and
disbursement
loan amount
Resolving a
problem
Customer
service help
lines
Mobile banking
15. Has your bank improved in completing operations in lesser time when compare
to past ? *
(Before introduction of alternate delivery channels)
Strongly Agree
Agree
Disagree
Strongly Disagree
Other:
16. Are you satisfied with the overall performance of the Bank? *
(Attentiveness, transparency, security...etc )
Strongly Agree
Agree
Neither Agree Nor Disagree
Disagree
Strongly Disagree
Submit
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References:
“Business Process Reengineering Initiatives” compiled By Shailesh Kumar, 2011.
“Case Study: State Bank of India, World's Largest Centralized Core Processing
Implementation”, by Robert Hunt, 2009.
“Business Process Reengineering: INNOREGIO: dissemination of innovation and knowledge

management techniques”, by Sotiris Zigiaris,
“Business Process Reengineering (BPR): An Empirical Study on State Bank of India” by

Sanjeev Kumar, Dr. K. Mishra.
“BPR implementation process: an analysis of key success and failure factors” by Majed Al-
Mashari and Mohamed Zairi.
“Retail Banking - Opportunities and Challenges” by Shyamala Gopinath.
Yih-Chang Chen (2001) “Empirical Modelling for Participative Business Process

Reengineering”.
“Retail Banking Specification of Competency Standards” version 1 e 2011.
“A model of customer loyalty in the retail banking Market.” By Asuncioń Beerli, Josefa D.
Martıń and Agustıń Quintana.
“Trends in Retail Banking Channels: Improving Client Service and Operating Costs.” By
Capgemini.
“Trends in Retail Banking Channels: Meeting Changing Client Preferences.” By Capgemini.
“Retail banking - challenges ahead in distribution channels in Urban/rural India” by Vepa

Kamesham.
“Retail Banking - Models, Strategies, Performances and the Future -The Indian Scenario” by
J. Sethraman.
Annual reports of 46 Public, Private and Foreign banks that are present in Inida.

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BUSINESS PROCESS REENGINNERING

FOR RETAIL BANKS

Business Process Reengineering is fundamental rethinking and radical redesign of

KEY WORDS: Business Process Reengineering, BPR, Retail Banking.

3. Business Process Reengineering for Retail Bank……………….. 31

4. Impact of BPR on Retail banking………….……………………. 37

1.1 Business Process:

Figure 1- Business Process

1.2 Business Process Reengineering:

The globalization of the economy and the liberalization of the trade

Hammer and Champy provide the following definition:

Daven port given following definition:

Manager completes an application for a loan in electronic form, which in turn is

1.3 Key targets of BPR:

1.4 How can BPR be applied to an organization?

Eliminating Unproductive Uses of Time:

Eliminating Unnecessary Paper:

One common way to improve data processing is to eliminate unnecessary paper.

Eliminating Unnecessary Variations in the Procedures and Systems:

In many companies, separate departments use different systems and procedures to

1.5 Objectives of BPR:

Customer service oriented processes aiming to eliminate customer complaints. In service

Leadership through imaginative change providing to organization competitive advantage.

Improve drastically effectiveness and efficiency.

1.6 Different BPR Methodologies:

1.6.1 The Hammer / Champy methodology

1. Introduction into Business Reengineering

2. Identification of Business Processes

3. Selection of Business Processes

According to an organization‟s strategic objectives more criteria could be defined for

4. Understanding of Selected Business Processes

Before proceeding to redesign, the reengineering team needs to gain a better

5. Redesign of the Selected Business Processes

6. Implementation of Redesigned Business Processes

1.6.2.Davenport’s and Short’s methodology

1. Develop Business Vision and Process Objectives

2. Identify Processes to Be Redesigned

3. Understand and Measure Existing Processes

The functionality of selected process is understood here and their performance is

Table 1. IT capabilities and their organisational impact

Capability Organisational Impact/Benefit

Transactional IT can transform unstructured processes into routinized

Geographical IT can transfer information with rapidity and ease across

Automation IT can replace or reduce human labour in a process

Analytical IT can bring complex analytical methods to bear on a

Informational IT can bring vast amounts or detailed information into a

Sequential IT can enable changes in the sequence of tasks in a process,

Knowledge IT allows the capture and dissemination of knowledge and

Tracking IT allows the detailed tracking of task status, inputs, and

Disintermediation IT can be used to connect two parties within a process that

5. Design and Build a Prototype of the Process

 using IT as a Design Tool

 understanding generic design criteria

 creating organizational prototypes

1.6. 3 Consolidated BPR implementation Methodology:

Figure 6 : Consolidated BPR implementation Methodology.

i. Activity #1: Preparing for Reengineering:

ii. Activity #2: Map and Analyze As-Is Process:

V Activity #5: Improve Process Continuously: