National Banking Executive Steering Committee Agenda Agenda: - - PowerPoint PPT Presentation

National Banking

Executive Steering Committee

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Agenda:

Introduction 10 minutes

• New Steering Committee
• Purpose and Goals
• Additional membership?

National Banking Vision 60 minutes

• Discuss initial concepts
• Industry Comparison
• Reviews completed to date / remaining
• Feedback to date
• Refining the vision and guiding principles

Near-term Roadmap 30 minutes

• Tactical Activities
• Strategic Planning

Organizational Construct 10 minutes

• Additional Steering Committee members?
• Work team structure
• Budget/funding

Wrap Up 10 minutes

• Meeting dates going forward
• July Meeting Topics:
• Retail National Credit Acceptance
• Calendar of events / timeline

Meeting Logistics

Date: Thursday, June 20, 20xx Time: 2:00pm – 4:00pm CST Location: Chicago – 1BOP, 13th floor, SW Conf. Room Columbus – Polaris Conf. Room #3B0544

Meeting - Administrative Contact: Attendees:

Others TBD

Agenda

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National Banking Vision

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Discussion Topics

Discussion Topics  What is National Banking?  Why National Banking?  Where are we today?  How do we get there from here?  Closing Points

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What is National Banking?

 “National Banking” is a label for the next set of business initiatives which move us from our current organization to a unified set of customer-centric products and services that is consistent across channels and geographies for the enterprise. National Banking is a key enabler to the success of one person working with one customer one at a time.  Creating the specific goals of National Banking will require Bank One to a unified vision of the core elements of its business and the fundamental approach to interacting with customers.  In the end, National Banking goals should be an extension of the primary Bank One brand vision.

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What is National Banking: National Banking Capability Framework

National Banking is a collection of business capabilities that is centered around customer interactions and transaction management.

Channel Enterprise Transaction Processing

Transaction Initiation

Transaction Recognition (capture, authentication Transaction Routing

Integrated Technology Architecture

Common Channel Interfaces National Capture Capability Electronic Transaction Technology

EAI/ Middleware

Customer Application Technology

Output Engines

Data Electronification/ Workflow tools

Consistent, Ubiquitous Customer Interactions

View Customer Relationship Customer Sales & Servicing Manage Customer Relationship Customer Relationship Pricing Customer Level Decisioning/Scoring Customer Products (Stmts, Info Reporting) Mail/e-Mail/Fax Wireless Phone Web Retail Face-to-Face ATM/Kiosk

Transaction Formatting (translation) Enterprise Transaction Settlement Transaction Valuation (For Exch) Note: Customer and Transaction capabilities provide the foundation for servicing customer inquiry, issues and problems on an enterprise level. Strategies for providing and optimizing that service as well as gaining customer Insight from those interactions are the points at which National Banking and Customer Relationship Management Capabilities meet.

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What is National Banking?

Bank One actually has many activities underway that are a prerequisite to, impact or actually deliver National Banking business capabilities: Direct Activities

 Teller Platform Upgrade  Enterprise CIS  Deposit Applications re-architecture  Common Systems deployments (B1B)

Infrastructure Activities

 Enterprise Messaging Layer

Organizational Activities

 Enterprise Release Planning  Enterprise Testing  Enterprise Associate Adoption/Training

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For our customers, National Banking will mean…..

Why National Banking?

 Recognition of the individual and his relationship with the bank at any point of contact  Consistent banking experience regardless of geography or channel  Ability for a customer to relocate across geographies and retain Bank One financial relationships (without closing and reopening an account)  New products and services  Convenience  …and more

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• New Relationship Products
• Increased share of Retail wallet
• New Commercial Deposit Services
• 10% increase in middle market fee income
• Increased Commercial Profitability
• 25% increase in profitability of customers

consolidating accounts across states and increasing services

Value Levers

Shareholder Value

Operating Efficiency Capital Management Revenue Streams Growth Potential

Market & Customer Share Product Mix Margins & Fees FTE & Overhead Costs Economies of Scale Bad Debts Funding Mix Risk Profile Investment Management Business Mix Performance & Innovation Strategy & Execution

To a shareholder, National Banking can add value in many areas.

Example Sample Metrics

• Decreased Teller turn-over
• 2-5% decrease in turn over
• Increased Productivity in item processing -15% Productivity lift
• Decreased Fraud loss
• 20% decrease in fraud loss
• Decreased research/adjustment cases -10% case decrease
• Operations Consolidation
• Fewer sites
• Reduction of excess capacity
• Ability to “load level” functions across

enterprise

• Customer Retention
• 60% increase Customer retention due to

ability to retain relocating customers

• 15% increase due to convenience
• New customer acquisition
• Ability to attract new Large Corporate

customers due to “fluidity of transactions” across geographies

Why National Banking?

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Why National Banking?: Before and After

Before After

Business Processes

• Customer presents deposit outside of region
• Associate manually looks up customer account
• Associate manually places 1-2 day hold
• Customer transaction posts 1-2 days later
• Manual Operations procedures

Business Impacts

• Longer Teller Servicing time (-)
• Delayed Customer transaction posting (-)
• Delayed Customer funds availability (-)
• Increased Bank Risk (-)
• Increased Operational Costs (-)

Business Processes

• Customer presents deposit
• Associate enters customer account number
• Application returns customer hold recommendation
• Transaction posts same business day
• Integrated Operations procedures

Business Impacts

• Common Customer transaction posting experience (+)
• Funds availability appropriate to customer (+)
• Managed Bank Risk (+)
• Efficient Operations (+)
• More integration between applications (+/-)

Capability

Retail & Commercial Banking Transactions: Out of State Deposits

Business Processes

• Customer requests consistent, nationwide pricing
• RMs in each individual state manually set up pricing (not

consistent)

• Each state RM manages the customer;s accounts housed in

their state

• Customer receives multiple statements, service charges and

pricing discounts by state Business Impacts

• No consistent pricing (-)
• Multiple RMs managing same customer relationship (-)
• Minimal customer flexibility (-)

Business Processes

• Customer requests consistent, nationwide pricing
• Primary RM negotiates nationwide pricing and service charges
• Customer transactions priced at customer level, not account level
• Customer receives consolidated statement with nationwide service

charges applied based on aggregate account transactions Business Impacts

• Consistent, customer-driven pricing at national customer level (+)
• Primary RM manages customer relationship
• Flexible statement options, info reporting, etc (+)

Commercial Banking: Commercial Customer- Level Pricing

A a more specific level, National Banking capabilities bring unique benefits to customers and business processes, but enables consistency at the customer level.

Customer Relocates

Business Processes

• Customer calls Bank to notify about relocation/new address
• Associate informs customer that account must be close in

current state and a new account reopened in new state

• Associate assists with close process and initiation of new
• pen.
• MAJORITY of time, customer does not reopen account in

new state. Business Impacts

• Retention (-)
• Loss of revenue (-)

Business Processes

• Customer calls Bank to notify about relocation/new address
• Associate assists customer with address change and informs

customer of new branch/officer. ***No action from customer required, no account closure Business Impacts

• Retention (+)
• Revenue (+)
• Decreased Operational Costs (+)

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Where are we today?

4th Quarter 2001 National Banking Operating group formed. 1st Quarter 20xx The Operating Group outlined high-level goals for National Banking. Through a series of cross-functional work sessions, a vision statement and 6 main goals were formalized.* 2nd Quarter 20xx Specific projects for 2 of the 6 main goals were initiated. (Implementation dates: Customer View & Check Cashing-4th Quarter 20xx and Deposit Acceptance-1st Quarter 2003) 2nd Quarter 20xx National Banking core team formation began.

*Vision statement and goals can be referenced in Appendix.

As an organization, we have just started the “National Banking” journey.

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Where are we today?

With the B1B8 implementation, customer viewing capability and some transaction capability will be available (check cashing).

View Customer Relationship Manage Customer Relationship Customer Sales & Servicing Customer Relationship Pricing Customer Products (Stmts, Info Reporting) Customer Level Decisioning/Scoring Transaction Initiation Transaction Recognition (capture, authentication) Transaction Routing Transaction Formatting Enterprise Transaction Settlement Transaction Valuation (F/X)

Customer- Centric Interactions Enterprise Financial Transaction Processing Q402 Q103 Q203 Q303 Q403

= Full capability

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Where are we today?: Transactions

From a project perspective, each of these broad capabilities is being decomposed into more specific initiatives. One example of this is the “Transaction Processing*” capability goal—It has many individual development efforts.

Transaction Processing Q402 Q103 Q203 Q303 Q403 Check Cashing

• Phase 1 (Transaction Acceptance)
• Phase 2 (Hold and Risk automation)

Deposit Acceptance

• Within region
• At Teller
• At ATM

Payment Acceptance

• Consumer Loans
• Credit Card Payments
• Payments at ATM

Internal Transactions

• Transfers

Operational Enablement

• Service Enablement
• Operational Efficiencies

*Transactions: Allow deposits, check cashing, withdrawals, transfers, payments and consumer loan payoffs via any appropriate banking channel in the U.S.

= Full capability

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Where are we today?: Customer

Customer-Centric Interactions Q402 Q103 Q203 Q303 Q403

= Full capability

From the Customer Interaction perspective, the core components of the “Relationship View*” goal are being realized as part of the Enterprise CIS deployment with the Illinois conversion.

• LOB
• Unique customer ID
• Cust to Cust
• Account to Account
• Affiliations
• Hierarchies
• Cust Preferences
• Service indicators
• Informational messages
• Counter offers
• Enterprise, negotiated Customer pricing schedule
• Cross-product, cross geography
• Cust to Account
• Cust to Product

Customer Level Decisioning/ Scoring View Customer Relationship Manage Customer Relationship Customer Sales & Servicing Customer Relationship Pricing Customer Products (Stmts, Info Reporting)

• Packaged services/ relationship products
• Flexible combined Statements & info reporting
• Risk scoring
• Profitability
• Treatment indicators

*Relationship View: Provide our employees with a relationship view of all customers across all lines of business and geographies for excellent sales and service

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To fine-tune the National Banking efforts to get from where we are today to where we need to be for customers and shareholders will require the following major activities:  Refining the Vision  Obtaining Executive Unity and Sponsorship  Definition of guiding principles  Continuation and refinement of Tactical Activities  Acceleration and prioritization of Strategic Activities

How do we get there from here?

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Across the enterprise, we must continue to build core customer and financial transaction capabilities using the below guiding principles. If we do not follow common guiding principles for our change initiatives, we risk expending more resources to bridge non-complimentary solutions. Unity in approach can yield synergies and leveragable solutions that will result in lowered overall resource investments.

 Focus solutions on the Customer, not a product, region or application – enable employees to find the right solutions to meet unique customer needs  Data and customer servicing should be consistent across Channels  Information or processes should not be replicated in multiple applications (for example, each channel should not build a unique balance extract process.  Solutions should be common across geographies, but offer local market flexibility.  Transaction Solutions must service paper and electronic transactions  Core functions should not be replicated (customer pricing, etc.) How do we get there from here?: Guiding Principles

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In the immediate term, development activities for National Banking will be focused in 2 main areas. Tactical activities are those things that will occur in late 20xx and

• 2003. Strategic planning activities will begin immediately, but completion of

strategic items will likely extend beyond 2003. Tactical activities

 National Co-Mingle (requires memo post and backdating capabilities)  Deposit Acceptance (requires memo post and backdating capabilities)  Teller Processes

Strategic activities

 Alignment of National Banking strategy with Bank One enterprise customer goals  Enterprise Business Case development (defines value proposition)  Enterprise Technology Roadmap development

• Definition of infrastructure needs
• Definition systems architecture
• Definition of Information Model

 Enterprise Business Process/Operational Model

• Alignment of key change support functions (planning, testing, deployment, training)
• Alignment of key business support functions (fraud, risk mgmt, staffing models, etc.)

How do we get there from here?: Immediate Focus

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How do we get there from here?: Strategic Focus

Strategically, we will focus on identification and prioritization of initiatives that deliver the needed capabilities in a manner that balances investment and business value achieved.

0% 20% 40% 60% 80% 100% 3Q02 4Q02 2Q03 3Q03 4Q03 1Q04

View Customer Relationship Manage Customer Relationship Customer Sales & Servicing Customer Relationship Pricing Customer Products (Stmts, Info Reporting) Customer Level Decisioning/Scoring Transaction Initiation Transaction Recognition (capture, authentication) Transaction Routing Transaction Formatting Enterprise Transaction Settlement Transaction Valuation (F/X)

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Closing Points

National Banking IS:

 A way of improving customer interactions and conducting transaction activities that spans multiple technologies, channels and business processes  A key enabler for achieving the corporate vision and delivering “Individual Answers”  A way to drive top-line revenue growth

National Banking IS NOT:

 An independent, technology or transaction-only focused effort that is unrelated to core business processes  “One-size fits all” for all lines of business  Monolithic change program

Thoughts on:  Refining the Vision

 Obtaining Sponsorship

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Vision Appendix

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Capability Definitions

View Customer Relationship Manage Customer Relationship Customer Sales & Servicing Customer Relationship Pricing Customer Products (Stmts, Info Reporting) Customer Level Decisioning/Scoring Transaction Initiation Transaction Recognition (capture, authentication) Transaction Routing Transaction Formatting Enterprise Transaction Settlement Transaction Valuation (F/X)

Customer- Centric Interactions Enterprise Financial Transaction Processing

Ability to access all customer accounts regardless of product or geographic boundaries through a single method Ability to add and restructure customer relationships regardless of product or geographic boundaries. Ability to service a customer’s inquiry, requests or problems or extend appropriate sales offerings appropriate to a customer with consistency across channels and geographic boundaries. Ability to price customer products and services across products and geographies as appropriate to customer segment, transaction activity and channels utilized. Ability to offer products and services that are combined at the customer level regardless of product And geographic boundaries. Ability to analyze customer criteria and activities in order to manage risk at the customer level. Ability to initiate a customer transaction for any customer at any appropriate channel To recognize a customer transaction as belonging to a Bank One customer regardless of point or channel of presentation Ability to direct a Bank One customer transaction to the appropriate system of record in a current business day manner regardless of point of presentation. Ability to appropriately format transaction for system of record. Ability to move transactions seamlessly across enterprise without introduction of additional Financial risk. Also ability to provide transaction data to appropriate historical application. Ability to conduct customer transactions in currency appropriate to customer or country of business.

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Channel Customer Understanding

Strategic Profiling / Analysis Customer Insights Modeling/ Engines Relationship/ Campaign Mgmt.

Integrated Customer Data

Data

Sourcing Data Pre- Process Integrated Data Models (B2B & B2C)

Integrated Technology Architecture

Workflow / Alerts Telephony Infrastruc- ture EAI/ Middleware Standards Based Architecture Web Architecture Computer Hardware Mobile Technology

Customer Interaction Operations

Acquire the Customer Retain the Customer Develop the Customer

Personalization and Optimization

Customer Information Capture Interactions Offers Mail/e-Mail/Fax Wireless Phone Web Retail Face-to-Face ATM/Kiosk

CRM Financial Services Discussion Framework

Capability Reference

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Current Vision Statement and Goals

Vision Statement:

“National Banking will give our customers access to transactions and financial information anywhere in the country, will simplify our operating environment for our employees and will prepare us for acquisitions. National Banking will provide a common customer experience at all locations and through all access channels.”

Goals:

1.) Transactions: Allow deposits, check cashing, withdrawals, transfers, payments and consumer loan payoffs via any appropriate banking channel in the U.S. 2.) Information Access: Allow customers to access balances, transaction history, fees and service charges through Banking Centers, Call Centers, Internet and Commercial Information Reporting. 3.) Account Maintenance: Allow customers to open and close accounts nationwide, transfer accounts between states and make changes to demographic information through a Banking Center, Call Center and the Internet. 4.) Information Consolidation: Support the ability to consolidate multiple Deposit, Loan and Investment accounts for pricing, service charges, NSF/OD dispositions and credit review. 5.) Consolidated Statement: Provide consolidated statement capabilities. 6.) Relationship View: Provide our employees with a relationship view of all customers across all lines of business and geographies for excellent sales and service.

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Industry Competitor Analysis

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Customer Centric Interactions Financial Transaction Processing

Wachovia Bank of America JP Morgan Chase (2) Sun Trust (1) Bank One (1) US Bancorp Wells Fargo (3)

Below are the results of recent quantitative capability assessments in the two broad, core areas of National Banking, among banks with similar geographic

• perations models and customer bases.

Percent of full National Banking capability

Notes: (1) Based on planned capabilities by EOY 20xx (2) Smaller geographic footprint, resulting in less cross-over and time zone complexities (3) Wells placement is based on market knowledge, not in-depth analysis Comerica : FOR INTERNAL BANK ONE DISCUSSION PURPOSES ONLY

Industry Competitor Analysis

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National Banking capabilities on the previous graph were measured across the following criteria for each bank:

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Industry Competitor Analysis

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The chart below shows the relative ranking of each bank across the 12 capability criteria:

Assumptions: (1) Ranking Scale: 3= Full capability, 0= limited or no capability (2) Assumes equal weighting of all 12 categories (each bank would put emphasis on different criteria, based on bank’s defined strategy) (3) Rankings based mostly on public information (web sites, call center interviews, etc) as well as some subjective judgment of each bank’s capabilities

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Customer Centric Interactions Bank of America Bank One Comerica JP Morgan Chase Sun Trust US Bancorp Wachovia Wells Fargo View Customer Relationship 2 3 2 3 2 3 3 3 Manage Customer Relationship 2 3 1 2 2 3 2 2 Customer Sales & Service 2 1 2 2 1 2 2 1 Customer Relationship Pricing 1 1 1 1 1 2 1 1 Customer Products 2 1 1 1 1 1 2 1 Customer Level Decisioning/ Scoring 2 1 1 1 2 1 1 Total (out of possible 18) 11 9 8 10 8 13 11 9 Financial Transaction Processing Bank of America Bank One Comerica JP Morgan Chase Sun Trust US Bancorp Wachovia Wells Fargo Transaction Initiation 3 1 1 1 2 3 3 1 Transaction Recognition 3 1 1 2 2 3 3 2 Transaction Routing 2 1 1 2 2 2 2 2 Transaction Formatting 2 1 1 2 2 2 2 2 Enterprise Transaction Settlement 3 1 1 2 3 3 2 Transaction Valuation Total (out of possible 18) 13 5 4 8 10 13 13 9

Industry Competitor Analysis

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Near-Term Roadmap

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• I. Strategic Vision
• Create Vision discussion document
• Review Vision with key

stakeholders/ Bank One leadership

• Conduct “Roadshow” discussions to

share common Vision

• II. National Banking Business

Case Approach

• Determine Scope/Framework
• Business Requirements Definition
• Capability Roadmap
• Confirm Areas Impacted
• Confirm Systems Impacted
• Finalize Assumptions/

Dependencies/ Risks

• Value Proposition Definition
• Finalize Change Management

Requirements

• Resource Planning
• Construct detailed timelines
• III. Target Environment Definition
• Technical Architecture/ Infrastructure

Roadmap

• NEO Target Operating Environment

Executive Steering Committee Meetings May Jun Jul Sept Oct Aug FY2003 Planning Meeting

Strategic Planning Roadmap - DRAFT

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Work Team Structure

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Executive Steering Committee Infrastructure National Banking Team

Product

Work Team Structure