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CASE STUDY | Financial institutions
How we helped a banking association define the migration strategy to SEPA
Our client, a banking association, was aware that SEPA would significantly change the European payment systems scenario. All European countries had to implement new SEPA payment rulebooks in 2010. In this context, they wanted to define their own migration strategy, including a detailed migration plan, according to the European regulation.
Together with the client team, Value Partners analysed the existing scenario on the Italian market, also assessing interbank networks and processors’ situations, supporting the definition of a detailed migration and communication plan aligned with the European guidelines. The team also outlined a fully-detailed test plan for new SEPA services and defined the interoperability model for national Automated Clearing Houses (ACH). Furthermore, we supported stakeholders’ management activities, including their relationships with central banks and regulatory authorities.
The project greatly impacted on the whole sector and resulted in the successful migration of the Italian banking community to the SEPA framework.
How we helped a bank restructure its retail business
Our client, a well-established Middle Eastern bank, called us for help in exploiting the potential of retail banking in the country. In this context, the management team had recently undergone significant changes and was only partially ready for the challenge. Our client was aware that the product catalogue, credit policy, organisational structure, some core processes (sales, lending) and commercial reporting all had to be radically improved.
In a structured way, our international team reviewed our client’s performance in retail. We firstly covered the main gaps by writing a new retail credit policy, consequently reviewing the product catalogue. We then redesigned the lending process and reassigned lending authorisation. We also defined the to-be sales organisation, the targets and the related incentive schemes.
The project resulted in a new culture of cooperation between the business and credit authorities, and a streamlined product catalogue. A new retail organisation has been established and integrated with some newly-hired managers. We also achieved awareness of credit delinquency among different products and within different customer segments, and implemented more effective recovery and collection procedures.
Our client now has a new product portfolio, cleansed of negative profitability products, and the turnaround time for a loan has been reduced by 50%.
Improving back-office operations
Our client, a leading global bank, called on us for help in improving back-office operations and to review the post-merger organisation. In particular, our client was in need of strategic advisors to take difficult decisions and implement change, as well as setting realistic targets considering the best market practices.
In the meantime, a new project leader, coming from the holding, was appointed.
The team outlined a long-term (3-5 years) plan for the back-office organisation, by working on process optimisation and operations plants review, on investments into IT applications to streamline activities (e.g. payments, lending), and on outsourcing contracts.
We then advised the client to think in a group-wide perspective, sharing what they were excellent at (payments, for instance) to mutualise their internal best practices. We were also involved in the PMO in internal/external communication.
The project resulted in a quick-win plan to achieve first synergies, and a mid–to-long-term plan to transform back-office operations, optimizing plants with the target of around €40 million running cost reduction.
The project was widely recognised as a success story within the company’s organization, and other countries asked our client to share results and improve their own back-office.
Helping our client develop and implement a strategic plan in the debit cards market
The European debit cards market was changing: new European regulations, new technologies and the increasing competition of international schemes were putting the leadership of domestic payment schemes at risk.
In this context, Value Partners helped the Italian market leader develop a strategic plan and implement it over a period of two years, in order to combat market share erosion by international competitors.
Our client’s leadership in Italy was built on low costs and the high degree of security of its service. Despite that, the need to be SEPA-compliant and a relative gap in the offer to final users and associates represented a serious risk that had to be faced immediately.
The project was divided into two phases: the development of the strategic plan and its implementation.
In the first phase, the aim was to define the new medium-term positioning and to identify a series of actions to be taken in 3 years. The team undertook a deep analysis of the market payments system in Europe, with a focus on the domestic markets, identifying the main factors of change and their impacts on existing players. We also tried to point out the current relationship between the service provided by our client and the players of the payment systems’ value chain.
Furthermore, we evaluated the service’s current positioning along 6 main dimensions (control over the value chain by each player; portfolio of services available to associates; level of internationalisation; range of served markets; costs; services provided to final clients). By the end of the first phase of the project, Value Partners had outlined the client’s current positioning and defined a medium-term strategy and the initiatives to be started.
We then presented a business plan for 2009-2011 initiatives and introduced an Auditing-Risk Management function to tighten our client’s control over the Value Chain. In addition, we developed the funding strategy and the key elements for a new internal organisation.
In the second phase, Value Partners helped finalise the strategic plan for 2009-2011 and supported the client during the first year of its implementation. The team led a PMO (programme management office) of all activities aimed at respecting time, managing priorities and ensuring the finalisation of the action plan.
The project resulted in increased efficiency of the system, improved control of the payment card value chain, and innovation in both products and functionalities to final customers.
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