Operational efficiency and managing your supply chain Presentation - - PowerPoint PPT Presentation

PwC Nigeria's FS Webinar

COVID-19 and the Financial Services Industry

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Conversations with Business Leaders

Operational efficiency and managing your supply chain

Abiodun Falade

Operations, Advisory Manager PwC Nigeria

The Moderator

Welcome

Opening Remark Andrew S. Nevin

Partner and Chief Economist & West Africa Financial Services Leader

Subject Matter Expert

1

Adedoyin Amosun

Operations & Financial Services Advisory, Associate Director PwC Nigeria

Coming up next

COVID-19 and its impact on the Nigerian FS industry

Operational efficiency

PwC 6 Date Presentation Title

3

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6 NNPC Retail Limited Lubricants Business Plan February 2020

Content

Key concerns for the COO Global responses to the COVID-19 pandemic: Operational efficiency initiatives Key Operational considerations for the FS Industry

COVID-19 pandemic: Key concerns for the COO

PwC

Typical Risks and Challenges-Operations

8

The COVID-19 pandemic has put Financial institutions in a business continuity mode with the resultant challenges to their

• perations…(1 of 2)

April 2020 COVID-19 and its impact on the Nigerian banking industry

Adequacy of viable alternatives for typical branch operations activities e.g. Card renewals, POS/ATM issues, Cash deposit Negotiating/renewal of credit lines for Medium and Large Corporates Impact on transactions in transit e.g. Clearing cheques & Transfer Instructions for loan repayment/deposits Providing Financial service to the vulnerable-Elderly, those avoiding digital channels 01 02 03 04

PwC

Typical Risks and Challenges-Operations

9 April 2020 Internal

The COVID-19 pandemic has put Financial institutions in business continuity mode with the resultant challenges to their operations…(2

• f 2)

No premium, No cover- Renewals, Extensions- Corporate, Micro and Retail Insurance Risks of Arson, breakdown of Law and Order, Counterfeiting Support for the Insured-Health, Life, Fire/Burglary Motor vehicle etc. Communicating with empathy and impact Balancing Risks and Controls in the new normal Managing Service levels Managing Third-party support

01 02 03 04 05 06 07

Global responses to the COVID-19 pandemic: FS Operations

PwC

COVID-19 pandemic: Key responses from global territories

11 April 2020 COVID-19 and its impact on the Nigerian banking industry

Financial Institutions across the UK, USA, Hong Kong, EU, UAE, Australia, Singapore have adopted various responses to address challenges as a result of the COVID-19 pandemic

• Adjusting queueing arrangements and use of alternate counters to meet social

distancing requirements

• Leveraging intelligent automation to deliver on increasing volumes of loan modification

programmes and government-guaranteed SME loans

• 3-6 months moratorium on mortgages and credit card debts
• Waivers of ATM, Overdraft, early deposit withdrawal and maintenance fees
• Deferrals, reductions and late fee waivers
• Acceptance of electronic service for legal service
• Leveraging Video conferencing tools for Customer engagement
• Adopting digital signature tools for remote signing of documents
• Emergency fund to help tackle the outbreak. Further steps include a fast track claims

process and waiving deductibles

• Doubling the benefits for frontline healthcare workers who are hospitalised due to

COVID-19

• Access to medically advised COVID-19 testing, waiver of co-pays and other forms of

cost sharing

• Provision of technological expertise including the development of a smart image-

reading system to help speed up diagnosis of suspected cases of COVID-19

• Clear communication on changing waiting times, new service levels and work-arounds

United States of America United Kingdom European Union

Australia

Key Operational considerations for the FS Industry

PwC

Setting up your COVID-19 response: Considerations (1 of 2)

13

COVID-19 response strategy

Protect your stakeholders and plan your workforce Workforce and Customers Operational focus

• Implement social distancing guidelines and infection prevention

initiatives at Customer touchpoints, Cash processing centres and Contact centres

• Identify the critical work which delivers your P&L, the workforce

that do this and the capacity of your organisation to move labour to sustain those critical activities

• Provide information to your teams real-time, communicating

changes and discussing the impact of these changes

• Ensure that there is full visibility of your people (location,

nationality, skills, etc.) and the right processes and systems in place to track and move your workforce, where required

• Complete workforce profiling to understand where work levels are

likely to decrease or increase

• Celebrate successes
• Determine processes to be centralised/ moved to

central processing centres (with a focus on branch processes and head office functions)

• Manage service levels to minimise waiting time and

customer frustration

• Enhance the capabilities of digital channels and

ensure appropriate distribution e.g. ATM kiosks accepting STC cash, Biometric withdrawals, Contactless payments

• Enhance your capacity to deal with rapidly increasing

volumes of delinquent accounts and loan modifications within a short timeline. Ensure staff are trained to deal with loan issues with empathy leveraging the knowledge of the customer’s business and available support programmes

• Simplify and communicate walk-arounds, loan relief

and other support programmes-e.g. Fee waivers for ATM usage, Insurance deductibles waivers and early termination of deposits etc.

• Deploy appropriate digital/ technology infrastructure to

support your critical business operations/ processes (including contact centre, branch and ATM operations)

• Explore video conferencing options for Relationship

managers and Contact centre agents

• Integrate processes end-to-end, leveraging technology

to deliver the desired customer experience

Balance risk with the cost of control Risks and Controls

• Create an internal and external stakeholder map for key

communications (considering staff, customers, suppliers, regulators, etc.)?

• Develop a clear communications strategy that can be

implemented in a crisis to protect your reputation and maintain the trust of your stakeholders

• Leveraging data, engage customers by sending

customised messages to various customer groups showing empathy, communicating walk-arounds and providing training on the use of digital channels

Maintain operational agility for business continuity

April 2020 COVID-19 and its impact on the Nigerian banking industry

Provide clarity to Customers, Employees and

• ther stakeholders

Communication strategy

• Develop a clear understanding of possible blind-spots for

additional fraud and execution risk arising from the adjustment of existing processes (especially with regard to supervisory functions and compliance operations)

• Create interventions and initiatives that have long-term

value

• Understand the existing process controls universe

(including the relevant costs) across the organization and align this with the risk appetite and impact on customer experience

Focus on data

• The impact of COVID-19 will vary from client to client

and as such, FS players need to leverage data to model the impact on each sector and each customer (subject to client specific- data)

• This should result in customized solutions and

communication for each customer group including Vulnerable groups such as the elderly

Gain insight, assess your exposure to risk and provide customised service

PwC

Thank you

Subject Matter Expert Oladunni Lawal

Operations Advisory Senior Manager PwC Nigeria

2

Coming up next

COVID-19 and its impact on the Nigerian FS industry

Cost efficiency

PwC 17 Date Presentation Title

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17 NNPC Retail Limited Lubricants Business Plan February 2020

Content

Key concerns for Cost Efficiency Global responses to the COVID-19 pandemic Key considerations for the FS Industry: Cost Efficiency

COVID -19 pandemic: Key concerns for Heads of Procurement: Cost Efficiency

PwC

Risks and Challenges

19

With the economic slowdown, there are heightened concerns around:

April 2020 COVID-19 and its impact on the Nigerian FS Industry

Balancing reducing revenue with planned third-party spend Extracting optimal value from existing supplier contracts Operational constraints of managing inflight projects and balancing spend/

• utcomes

Inability to receive products/ services due to global supply chain shut down Identifying strategies for alternative sourcing Increased communication requirements with suppliers and

• ther stakeholders

1 2 3 4 5 6

Global responses to the COVID-19 pandemic

PwC

COVID-19 pandemic: Key responses from global territories

21 April 2020 COVID-19 and its impact on the Nigerian FS Industry

Global Financial Services Institutions have adopted various responses to address challenges as a result of the COVID-19 pandemic

Centralising the procurement decision making process for all major/ strategic contracts Establishing a ‘situation room’ (with a cost sub-workstream) where procurement and supply chain risk and mitigations can be coordinated with other risk management teams Reducing non-discretionary spend including rationalising spend (e.g. marketing spend and promotions) on non-performing products and services Postponing price increases and renegotiating all contracts and KPIs with service providers Freezing non-essential recruitments, salary increases and overtime Centralising activities/ processes (e.g. call centers) to capture scale and improve utilisation Shutting down some branches temporarily (following a hub and spoke model) to emphasise flagship branches while closing smaller, less used/ outlets in a similar vicinity Donating unused facilities/ physical locations for public good

Key considerations for Cost Efficiency

PwC 23

COVID-19 response strategy

April 2020

Setting up your COVID-19 response: Considerations

Finding ways to trim costs quickly Cost Optimisation

Revisit/ review the annual spend budget and the book-of-work (including inflight projects and recent proposal selections) to identify optimisation opportunities and adjust where possible. Quickly prioritise project spend, assess what can be slowed/stopped and what can be redirected to initiatives with short-term impact, such as improving digital servicing capabilities Identify and triage all addressable spend (e.g. Procurement, Training and Technology costs etc.) into appropriate categories e.g. “must have” vs. “nice to have”. Develop and implement measures/ guidelines to support accurate tracking/ monitoring of cost savings initiatives across the organisation . Leverage existing technology/ processes to support efficient savings tracking. Consider centralising the procurement decision making process for all major and strategic contracts across the organization. Define and communicate the process for incurring new costs (including defined limits and Executive Management approval/ buy-in). Seek to institutionalise a “cost consciousness” culture within the organisation

Supply Chain Optimisation Protecting your supply chain

Renegotiate existing contracts with suppliers to reduce third party external spend without comprising value (e.g. postponing planned price increases). Develop a communications strategy and plan for dealing with your suppliers. Consider redirecting spend towards local businesses/ SMEs that are going to need it to survive, including those within your lending portfolios Review/ update the requirements of key suppliers (such as facilities management and IT service providers) in light of any requirements that may change during a pandemic period (e.g. increased cleaning regimes). . Identify and ensure continuous monitoring of exposure trends and restrictions against your supply chain . Develop visibility of critical supply chain data to properly assess the potential challenges and create immediate plans. Leveraging classification of spend items into appropriate categories (e.g. strategic and non-critical), develop supplier management strategies. For critical suppliers, consider a review of their Business Continuity Plan (BP) to the extent possible, to better understand their crisis response strategy. Identify/ evaluate strategies for alternative sourcing, including substitutes for key spend items and alternative suppliers. Enforce continuous supplier performance management to prevent complacency.

COVID-19 and its impact on the Nigerian FS Industry

PwC

Thank you

All

Questions Answers &

The Survey Adedoyin Amosun

Operations & Financial Services Advisory, Associate Director PwC Nigeria

Coming up next

COVID-19 Implications: COOs and Heads of Procurement Survey

April 2020

PwC 28 April 2020

The Survey respondents were drawn from across the FS Industry

Private Equity

5.9%

PwC

About 31% of FS Operations and Procurement executives believe that the impact of the pandemic will last for 3-6 months while another 31% see it lasting for and 6-12 months.

29 April 2020

PwC

Most Operations and Procurements respondents opine that the pandemic would negatively impact revenue and or profit

30 April 2020

Decreased revenue and/or profits We do not expect any impact to revenue and/or profits It is difficult to assess at this point Increased revenue and/or profits

PwC

Global recession (75.6%), Effect on workforce/Reduction in productivity (53.3%) and Market Volatility & Adequacy of operational framework (35.6%) are the top 3 concerns for respondents

31 April 2020

Global recession Cybersecurity/Fraud threats The effects on workforce/reduction in productivity Adequacy of the Operational framework to meet the requirements of the new normal Deterioration of support services because of internal challenges or supply chain problems Lack of clear visibility of third-party spend Maintenance of Service level agreements and controls as certain activities increase Emergence of new blind spots for additional fraud and execution risk Misalignment of the business strategy to operational/ cost management strategies Market volatility Misalignment of business strategy to risk appetite Not having enough information to make good decisions Lack of a comprehensive/ tested company emergency preparedness plan

PwC

44% of Operations and Procurement executives are of the view that their respective companies will recover from the pandemic in less than a month

32 April 2020

PwC

42% of respondents indicated that they will be delaying investment decisions as a result of the COVID-19 pandemic

33 April 2020

PwC

Thank you

Closing

Abiodun Falade

Operations, Advisory Manager PwC Nigeria

The Moderator

PwC

Thank you

This webinar has ended For more insights on how to respond to the business impacts of COVID-19

Visit our COVID-19 Content Hub at www.pwc.com/ng/Covid-19 Access COVID-19 Resources on PwC Nigeria's Tax 247 Mobile App available on both Google Play Store and the Apple App store