Compliance Risk in Investment Banking

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					     The Unified Banking
  Process Framework (UBPF)
                     Developed and Managed by
              The School of Information Systems
              Singapore Management University


          Created with Ongoing Inputs from
    Technology & Operations Experts and Leaders
         across the Global Banking Industry

Updated on 3 December 2009
History: From the Initial SMU Banking Process Framework to the
Unified Banking Process Framework
                                                                                Customer Needs,                            Bank Management                   Software
2006 – 2007:                                                                    Banking Products                                  Needs                      Systems
                                                                                Knowledge of end-to-end
                                                                                  and Services
     Initial                                                                    process life cycle based
                                                                                on institutional banking
SMU SIS Banking                                                                 Knowledge of end-to-
                                                                                products.
                                                                                                                   Middle Office services supporting the    Systems that
                                                                                end process life cycle                          life cycle –                 support the
    Process                                                                     based on institutional                          Compliance                 trade life cycle
  Framework                                                                      banking products.                          Risk Management                 and the cross



                       Reviews Maintenance Fulfillment Acquisition Engagement
                                                                    Customer
                                                                                                                     Product Control and Accounting            product
                                                                                                                                                              services
2008:
Singapore’s National




                                                                                          Process Life Cycle
                                                                                                               Through interactions between NICF
                                                         Order



Infocomm Competency                                                                                            Financial Services Working Group and
Framework,                                                                                                     SMU SIS BPF creators, an improved
                                          Transaction




Financial Services                                                                                             structure for a “knowledge map” of banking
Working Group, uses
                                                                                                               is created. The knowledge map
SMU SIS BPF as a key
                                                                                                               systematically organizes the essential types
input and output
                                                                                                               of domain, process and systems
                                                                                                               knowledge that an IT Professional needs to
2008 and onward:                                                                                               support the banking business.
SMU SIS continues
intensive development
effort on banking process
                                                                                SMU SIS Revised
& IT educational
framework and expands it                                                        UNIFIED BANKING
into the UBPF                                                                      PROCESS
                                                                                 FRAMEWORK
                                                                                                                                                                              2
The SMU SIS Banking Industry initiative develops
skills in Banking Technology across different levels
     Retail       Investment        Singapore Management University
    Banking        Banking,
                Capital Markets
                                      School of Information Systems
                                    Banking Technology & Operations
           Unified                             Programme
          Banking
          Process                              Masters Level
         Framework
                                        Professional Short Courses
    Private       Corporate &
   Banking &      Institutional
  Wealth Mgmt       Banking                Undergraduate Level


                Joint effort to develop IT professionals
                        for the banking industry
                              ATTRACT
                              PREPARE
                                RETAIN

                                                                      3
Banking Industry Issues for Tech & Ops Professionals
 • Allure of front office
     – All the “smart ones” want to be investment bankers, private bankers,
       fund managers…
 • Operations complexity
     – Global delivery model for business processes and IT services
     – Complexity of
         • Products and services
         • Application software
         • Infrastructure
     – IT rate of change
 • Operations & Technology importance and impact:
     – Enabler for cost, revenue, speed, service, compliance change
     – Large footprint (people, budget, assets)
 • Industry’s training model - old days vs today


                                                                              4
Industry issues
                                                      Hard to attract
                                                      and retain
• Allure of front office
    – All the “smart ones” want to be investment bankers, private bankers,
      fund managers…
• Operations complexity
    – Global delivery model for business processes and IT services
    – Complexity of
        • Products and services
        • Application software
        • Infrastructure
    – IT rate of change
• Operations & Technology importance and impact:
    – Enabler for cost, revenue, speed, service, compliance change
    – Large footprint (people, budget, assets)
• Industry’s training model - old days vs today




                                                                             5
Industry issues
                                                 It’s complex. It’s tough.

• Allure of front office                       And you need the brains
                                                bankers, private bankers,
   – All the “smart ones” want to be investmentand decision acumen of
     fund managers…
                                               the best in the front office
• Operations complexity
    – Global delivery model for business processes and IT services
    – Complexity of
        • Products and services
        • Application software
        • Infrastructure
    – IT rate of change
• Operations & Technology importance and impact:
    – Enabler for cost, revenue, speed, service, compliance change
    – Large footprint (people, budget, assets)
• Industry’s training model - old days vs today


                                                                              6
Industry issues

• Allure of front office
    – All the “smart ones” want to be investment bankers, private bankers,
      fund managers…
• Operations complexity
    – Global delivery model for business processes and IT services
    – Complexity of
        • Products and services
        • Application software
        • Infrastructure
    – IT rate of change
We don’t train them
• Operations & Technology importance and impact:
like we used to
    – Enabler for cost, revenue, speed, service, compliance change
    – Large footprint (people, budget, assets)
• Industry’s training model - old days vs today



                                                                             7
Scope of the Unified Banking Process Framework
 Scope of most                   Bank’s External View                  Bank’s Internal View (View 1)
                                  Customers & Needs                    Bank Business Segments
  FSI training                    Industry Products & Services         Bank Products & Services across Segments
                   Bank’s
                  Business        Market Organization                  Bank and Product Revenue Models
                                  Market Participants & Roles          Bank Organization
                  Context
                                  Regulatory & Market Requirements     Bank Governance
                                                                        Bank Level Risk Management
                                                                        Bank Level Financial Management



                                   View 2       End-to-End Process Lifecycles for Product & Services
                                   View 3       Bank Management Functions and Processes
                                                       A. Compliance
                 Processes,                            B. Risk Management
                 Operations                            C. Product Control
                     &                                 D. Accounting
                                   View 4       Data Lifecycle - Creation, Measurement and Usage
    UBPF Scope




                 Technology
                                   View 5       Software Applications & Systems
                                   View 6       Channel Delivery & Channel Infrastructure
                                   View 7       Enterprise Architecture & Integration

                 Technology &     View 8        Organisation & Sourcing
                  Operations      View 9        Process Performance & Management
                 Management       View 10       Total Cost of Process Execution

                    Change
                  Scenarios &     View 11       Change Scenario & Impact Tracing
                 Collaboration



                                                                                                                    8
Purpose of the Unified Banking Process Framework
 To support the Banking T&O groups to create Competitive Advantage
 through
    1.   a structured and process oriented approach to banking service
         delivery to achieve:
         •   Superlative Customer Service;
         •   Cost-effective Delivery;
         •   The ability to control operations and manage the various types of risk; and
         •   The required information support for management decision making.

    2.   A unified and consistent way of representing all segments of banking
         in terms of process, data and technology.
    3.   A Building Blocks approach
         •   The ability to understand how to combine, aggregate and disaggregate any
             banking process, current or future




                                                                                           9
The UBPF is a framework for understanding linkages between
Customer Needs and Bank Management Needs

 Customer       Investment Banking             Corporate &            Private Banking & Wealth                      Retail
  Types          & Capital Markets        Institutional Banking             Management                             Banking



                                                                                                                        Securities
                 Investing         Financing
 Customer                                             Support for           Receiving/              Managing           Safekeeping/
                  Savings/         Personal/
  Needs                                              Cross Border             Paying                Portfolio             Trade
                  Surplus          Business
                                                     Trade/Projects        for Services               Risk              Settlement
                   Funds             Needs
                                                                                                                         Support


   Bank          Deposits/                                               Remittance/ Cash     Capital/Currency         Custodian
 Products                      Loans/Advances        Trade/Project
               Investments/                                               Management/          Commodities              Services
   and                          Fund Raising            Finance
                 Insurance                                                    Cards                Market
 Services


Transaction
 Fulfillment                  PROCESS                             DATA                              TECHNOLOGY
  Enablers


                    Accounting &                Internal Risk
                      Financial                 Management,                       Customer,
                                                                                                                Systems Design,
                      Controls,                   Controls,                     Sales Force,
   Bank                                                                    Distribution Channels,
                                                                                                                   Controls,
Management           Reporting,                  Reporting,                                                       Production
                       Audits                    Compliance                   Data & Analytics
  Needs
                     Financial                     Risk                         Channel                    Operations & Technology
                    Management                  Management                     Management                       Management

               The Unified Banking Process Framework is used to visualise how a bank meets customers
               needs and internal management needs through processes, data and technology
                                                                                                                                      10
      Unified Banking Process Framework Model
                               REGULATORY BODIES
                   Customers / Market Participants (internal, external)

                                            BANK
    1.    Banking Business Segment View: Customers, Products and Services for
                    Investment, Corporate, Private, Retail Banking

                2. Product &           3. Bank Management Functions               4. Data
             Process Lifecycle                & Processes View                Lifecycle View
                    View
Process




                                      Middle Office services supporting the     Data used to
            Knowledge of end-to-      life cycle –                               implement
            end process life cycle            Compliance                         business
             based on specific                Risk Management                    products,
             banking products.                Product Control                processes, rules
                                              Accounting                      and analytics

              5. Software Systems
              6. Channel Delivery & Channel Infrastructure View
              7. Enterprise Architecture & Integration View
              8. Organization and Sourcing View
              9. Process Performance View
              10. Total Cost of Process Execution View
              11. Change Scenario & Impact Tracing View


          The 11 views of the UBPF are used to understand linkages and flows across
          banking processes, data, technology and operations
                                                                                                 11
UBPF Focus: Banking Processes, Data, Technology & Operations
Scope of


training
                  Bank’s
  most
   FSI
                 Business               1. Banking Business Segment View: Customers, Products and
                  Context                 Services for Investment, Corporate, Private, Retail Banking

                                                 2. Product &           3. Bank Management               4. Data
                                              Process Lifecycle              Functions               Lifecycle View
                                                     View                & Processes View
                                                                                                       Data used to




                                    Process
                                              Knowledge of end-to-     Middle Office services           implement
  UBPF Scope




               Processes,                     end process life cycle   supporting the life cycle –       business
               Operations                      based on specific              Compliance                products,
                                               banking products.              Risk Management       processes, rules
                   &                                                          Product Control        and analytics
               Technology                                                     Accounting

                                               5. Software Systems
                                               6. Channel Delivery & Channel Infrastructure View
                                               7. Enterprise Architecture & Integration View
                                               8. Organization and Sourcing View
               Technology &
                Operations                     9. Process Performance View
               Management
                                               10. Total Cost of Process Execution View
                 Change
               Scenarios &                     11. Change Scenario & Impact Tracing View
               Collaboration

                        The UBPF is focused on Banking Technology & Operations,
                   though it incorporates aspects of the business context needed for T & O
                                                                                                                        12
THE UBPF is designed to enable T&O Professionals to visualize
and analyze FLOWS of information within and across Views
                Unified Banking Process Framework
                                                    Views 2 & 3


                                                    Micro Views 2 & 3
       View 7

  Enterprise
  Data Model




      Micro View 5

                                                                        13
Taken all together, UBPF Views 1 to 11 enhance

1. the ability to plan, execute & manage
     Design-Source-Implement-Operate projects
       •      Technology focused and/or
       •      Process and operations focused

2.   effective collaboration with senior management across the
     various business functions and units of the bank


3.   integrated Business-Process-Technology analysis, decision
     making and execution


Request to the industry:
Continue collaborating with us to further develop UBPF content and
examples so it helps you to do these things more effectively


                                                                     14
Types of Banking Customers and Customer Needs
                   Individuals                   Institutions                 Government
                                                                           Individuals

             • Single/Joint Person         • Companies                    • Local
              Consumer Banking                  - Banking                • National
              Priority Banking                  - Non Banking            • Supranational
 Types of     Private Banking                          * Large
 Customer          - Joint Accounts
                                                        * Medium
                                                        * Small
                   - Partnerships          • Non Corporate bodies
                   - Family Units                - Trusts
                   - Family Businesses           - Associations




                                                                                       Securities
             Investing       Financing    Support for      Receiving/    Managing     Safekeeping/
 Customer    Savings/        Personal/   Cross Border        Paying      Portfolio       Trade
              Surplus        Business    Trade/Projects   for Services     Risk
  Needs        Funds           Needs
                                                                                       Settlement
                                                                                        Support



            This summary of customer types and needs supports UBPF View 1


                                                                                                     15
Major Activities and Products in Various Business Segments of the Banking Industry
                              Client                    Client                 Client                  Client            Direct    Indirect
                                                                                                                         Client     Client
     Sales done by                             Relationship Managers                               Sales Staff
 Banking Segments                                                                                                       Other Services
                         Investment                  Corporate &          Private Banking                               (External Firm,
 Bank Products &      Banking & Capital              Institutional            & Wealth           Retail Banking        Bank Subsidiary,
    Services               Markets                     Banking             Management                                  or Unit Inside the
                                                                                                                            Bank)
                                                    Current Account         Current/Savings      Savings Account
                                                    (Core Banking)             Account            (Core Banking)
                                                                                                                      Insurance Underwriting
     Deposits                                                               (Core Banking)
                                                     Time Deposits                                 Time Deposits
                                                    (Core Banking)                                (Core Banking)
                                                                                                                          Asset & Fund
   Investments        Investment Products                                 Investment Products   Investment Products
                                                                                                                          Management
                          Fund Raising                   Loans                                        Loans
 Loans/ Advances/
                                                                                                   (secured and       Leasing Underwriting
   Fund Raising                                   Asset-based Finance                               unsecured)

  Trade/ Project                                    Trade Finance
     Finance                                        Project Finance

                                                   Accounts Payable
                                                  Accounts Receivable
 Remittance/ Cash
  Management/                                      Cash Management

                                                     Corporate FX
                                                                                                Mass Market Retail
                                                                            High Net Worth
   Credit Cards                                  Corporate Credit Cards                         Cards, Higher Net
                                                                                Cards
                                                                                                  Worth Cards
                      Institutional Customer      Corporate Customer          Portfolio          Retail customer          Asset & Fund
 Capital/ Currency/
                         Account Trading           Account Trading           Management          Account Trading          Management
   Commodities
      Market           Proprietary Trading

Custodian Services      Custody Services           Custody Services
                                                                                                                                          16
Major Banking Segments and their Products & Services
Investment Banking                           Corporate &                 Private Banking & Wealth                     Retail
 & Capital Markets                       Institutional Banking                 Management                            Banking


                          Asset Classes for Capital Markets
  Equities        Fixed Income              FX          Commodities      Derivatives



      Deposits                           Loans                Trade              Payment & Cash Management
 Current/                                      Asset-                                           Liquidity                Custody
                 Time                                     Project     Accounts    Accounts                   Corporate   Services
 Savings                         Loans         based                                              Mgt =
                Deposit                                   Finance      Payable    Receivable                    FX
   Acc                                        Finance                                           Treasury



    Asset Classes for Private Banking & Wealth Management
       Retail products                Investment products
                   Discretionary Portfolio/
                    Customised Products



                                            Individual Retail Customer                                        Retail Merchant Customer

            Deposits                             Consumer Finance                 Payments        Retail
                                                                                     and       Investment       Credit Card Collection
   Current/             Time        Secured       Unsecured       Credit Card
                                                                                   Clearing      Services
 Savings Acc           Deposit       Loans          Loans          Issuance



                            The product families for each main banking segment supports
                                                  UBPF Views 1 & 2
                                                                                                                                         17
Viewing banking products in terms of
their process life cycle
 Product Creation                          Product Design & Setup

                                           Customer Engagement

                                        Customer Order Acquisition

 Execution                                  Transaction Fulfillment

                                                  Maintenance

                                                     Reviews

 Product Retirement                  Product Wind Down & Phase Out

   This banking product end-to-end process life cycle supports UBPF View 2 and 3


                                                                                   18
Execution Process Life Cycle Summary for Major Banking Segments
                                                 Investment                                 Corporate &                                    Private Banking &
                                                                                       Institutional Banking                              Wealth Management                                     Retail Banking
                                                   Banking
                                               Fund        Capital          Corporate            Cash             Securities and           Investment,              Retail                 Individual                Retail
                                              Raising      Markets,          Finance          Management              Fund                Capital Market           Services                  Retail                 Merchant
                                                 &         Trading                                                Administration           & Corporate                                     Customer                 Customer
                                             Issuance                                                                                        Services

                               Customer                 - Pre trade         - Sales           - Sales             - Sales                 - Sales               - Sales              - Sales                     - Sales
                               Engagement                                   - Account &       - Account &         - Account &             - Account &           - Account &          - Account & Product         - Account & Point-
                                                                              Product           Product Setup       Product Setup           Product Setup         Product Setup        Setup                       of-Sales Device
                                                                              Setup           - Credit Facility   - Credit Facility                                                  - Standing Instructions       Setup
                                                                                                Setup               Setup                                                              (Payment & Clearing)

                               Order                    - Trade             - Contract                                                    - Contract            - Contract           - Contract initiation per
                               Acquisition                                    initiation                                                    initiation            initiation per       contract
                                                                            per contract                                                     per contract         contract
Execution Process Life Cycle




                               Transaction              - Post trade        - Contract                            - Contract life         - Contract life       - Contract life      - Contract life cycle       - Collections/
                               Fulfilment                                     life cycle                            cycle tracking till     cycle tracking        cycle tracking       tracking                    Clearing through
                                                                              tracking till                         maturity per            till maturity per     til maturity per   - Individual retail           VISA/ MC/
                                                                              maturity                              contract                contract              contract             transaction fulfilment      AMEX
                                                                              per                                                                                                      (Cards)
                                                                              contract                                                                                               - Revolving credit for
                                                                                                                                                                                       outstanding balances
                                                                                                                                                                                       (Cards)

                               Account                  - Account           - Contract        - Account           - Contract life         - Contract life       - Contract life      - Contract life cycle       - Account
                               Maintenance                Maintenance         life cycle        Maintenance         cycle tracking till     cycle tracking        cycle tracking       tracking                    Maintenance
                                                                              tracking till                         maturity per            till maturity per     til maturity per   - Account
                                                                              maturity                              contract                contract              contract             Maintenance
                                                                              per                                                                                                    - Standing Instructions
                                                                              contract                                                                                                 Maintenance
                                                                                                                                                                                       (Payments &
                                                                                                                                                                                       Clearing)

                               Reviews                                                                                                    - Customer            - Customer           - Consolidated              - Customer Level
                                                        - Customer          - Customer        - Customer          - Customer Level                                                     Customer Portfolio          Portfolio
                                                                                                                                            Level Portfolio     Level Portfolio
                                                          Level Portfolio     Level             Level Portfolio     Portfolio                                                          Statement                   Management
                                                                                                                                            Management          Management
                                                          Management          Portfolio         Management          Management
                                                                                                                                          - Product Level       - Product Level      - Customer Profiling        - Product Level
                                                        - Product             Managem         - Product           - Product Level
                                                                                                                                            Review across       Review across          and Buying Patterns         Review across
                                                          Level Review        ent               Level Review        Review across
                                                                                                                                            bank                bank                                               bank
                                                          across bank       - Product           across bank         bank
                                                                                                                                          - External            - External           - Customer Loyalty
                                                        - External            Level           - External          - External                                                           Programmes (Credit        - External
                                                                                                                                            reviews             reviews
                                                          reviews             Review            reviews             reviews                                                            Card Issuance)             reviews
                                                                              across
                                                                              bank                                                                                                   - Third Party Joint
                                                                            - External                                                                                                 Promotions
                                                                              reviews



                                                 The process execution lifecycle for each product & service family, across segments,
                                                 supports UBPF Views 1 & 2

                                                                                                                                                                                                                                   19
UBPF Process & Software Systems Map
for each Banking Business Segment
This overview map captures highlights:
1) The execution segment of the process life cycle for the products of a specific Banking
  Business Segment.
2) The key internal management & control activities (compliance, risk management, product

   control, and accounting ) required for meeting the bank’s internal and external
   management needs.
3) The specific types of software systems that support the above.
                                                                                                                                               2. Product &           3. Bank Management         4. Data Lifecycle
                                                                                                                Acquisition Engageme
                                                                 Customer                                                                   Process Lifecycle               Functions                  View
                                  Execution Process Life Cycle

 This Process & Software                                                                                                               nt          View                 & Processes View
 Systems map supports UBPF                                                                                                                                                                         Data used to
                                                                                                                                            Knowledge of end-to-     Middle Office services         implement
 Views 2 , 3, 4 and 5
                                                                 Transaction Order




                                                                                                                                              end process life       supporting the life cycle       business
                                                                                                                                               cycle based on                                        products,
                                                                                                      Fulfillment




                                                                                                                                              specific banking              Compliance          processes, rules
                                                                                                                                                 products.                  Risk Management      and analytics
                                                                                            Maintenance




                                                                                                                                                                            Product Control
                                                                                                                                                     Process

                                                                                                                                                                            Accounting
                                                                                     Reviews




                                                                                                                                               5. Software Systems



                                                                                                                                                                                                                20
     An example of Process & Systems Map for a banking segment:
     Investment Banking & Capital Markets
                                                   Customer Needs, Banking Products & Services                                   Bank Management Functions & Processes                                       Software
                                 Trade Life        Specific                             Asset Class                              Compliance       Risk Management          Product          Accounting
                                                                                                                                                                                                             Systems
                                   Cycle          Life Cycle                                                                                      - Market risk            Control             View
                                                                  Equities   Fixed          FX      Commodities   Derivatives                                                               (Financial,
                                                                             Income                                                               - Position risk                           Managerial)
                                                                                                                                                  - Credit risk

                   Customer      - Pre trade      -Analytics,                                                                                     1)Pre settlement      1)Treasury        1) Financial     Trading systems
                   Engagement                     - Prices/ &                                                                   Trade             Credit Risk           Risk              reporting        Position mgt systems
                                                                                                                                  surveillance    - by customers        Management        (balance sheet
                                                  Quotation                                                                                                             (liquidity mgt)   P&L)             Pricing engines
                                                                                                                                 - by product     - by counterparties                                      Market Data
                                                                                                                                                                        - across          Local/HQ Gaap
                                                                                                                                 - across         - by product          products                           (Reuters…)
                   Order         - Trade          Order                                                                           product
                   Acquisition                    Routing,                                                                                        - across product      2) Position
                                                                                                                                 - by customers                                           2) Product /
                                                  Trade                                                                                           2) Market Risk        Management        customer
                                                                                                                                                                        &                 profitability
                                                  Capture                                                                                                               Reconciliation
                                                                                                                                - Customer
                                                                                                                                  standing                              - by product                       Order Trade Capture
                                                                                                                                  instructions                                            3) Regulatory
                   Transaction   - Post trade     -Settlement                                                                                                           - across                           systems
                                                                                                                                                                                          reporting a)
                   Fulfilment                     Modes:                                                                                                                products          central banks    Risk Mgt systems
                                                   CCP                                                                                                                  3) P & L                           Trade surveillance
                                                                                                                                                                                          - capital
                                                  versus non-                                                                                                           Management                         system
                                                                                                                                                                                          inflow/outflow
Trade Life Cycle




                                                  CCP                                                                                                                   • MtM
                                                  -                                                                                                                                       - balance
                                                                                                                                                                        (contract/asset   sheets P&L
                                                  Confirmatio                                                                                     Settlement Credit     class)                             Confirmation and
                                                  n                                                                                               Risks                                   b) local/HQ      matching systems
                                                  - Allocation                                                                                                          • fees &
                                                                                                                                                                                          Basel II
                                                  - Affirmation                                                                                   - by customers        Charges                            Trade settlement
                                                                                                                                                                        (contract)                         systems
                                                  (DVP)                                                                                           - by counterparties
                                                                                                                                                                        • spreads for                      G/L systems
                                                                                                                                                  - by product
                                                                                                                                                                        FX & interest
                                                                                                                                                  - across product                                         Credit Trade Central
                                                                                                                                                                        rates
                                                                                                                                                                                                           Liability systems
                                                                                                                                                                        (contract)
                                                                                                                                                                                                           Position/ Contract
                                                                                                                                                                        4) Referential
                                                  - Clearing &                        Operations Settlement                                                                                                reconciliation
                                                                                                                                                                        Data
                                                  Settlement                                                                                                                                               systems
                                                                                                                                                                        Management

                   Account       - Account                                                                                      AML               Clearing risks
                   Maintenanc    Maintenance                                                                                                      by ..
                   e
                                                                                                                                                                                                           Custodian Settlement
                   Reviews       - Customer                                                                                                                                                                systems
                                 Level
                                                                                                                                                                                                           Cash remittance
                                 Portfolio                                                                                                                                                                 systems
                                 Management
                                                                                                                                                                                                           Customer Demand
                                 - Product
                                                                                                                                                                                                           Deposit systems
                                 Level
                                                                                                                                                                                                           Nostro account
                                 Review
                                                                                                                                                                                                           reconciliation
                                 across bank
                                 - External
                                 reviews




                                                    This process and systems map supports UBPF Views 2, 3 and 4.
                                                This example is for the Capital Markets segment of Investment Banking.
                                                                                                                                                                                                                             21
The Importance of Linking Process and Technology Views
  Unified Banking Process Framework           Information flows within the
                                              banking domain and the processes

                                                                         Mapping
                                                                        process to
                                                                         software
                                                                         solution




 Mapping software
 solution
 capabilities
 to the process

          Information flows within the
          banking software solutions

                    The UBPF provides a structure for linking
              Process Views (1, 2 & 3) to Technology Views (4, 5 & 6)
                                                                                     22
The Importance of Linking Process and Technology Views
 Unified Banking Process Framework                  Information flows within the
                                                    banking domain and the processes

                                                                               Mapping
                                                                              process to
                                                                               software
                                                                               solution




 Mapping software
 solution
 capabilities
 to the process

          Information flows within the
          banking software solutions
       Linking UBPF Product Process Views (1, 2 & 3) to Technology Views (4, 5 & 6)



                Example of a Banking Enterprise Software Solution                          23
A core banking system from a UBPF Perspective



     View 6: Channel Delivery & Channel Infrastructure
            View 7: Enterprise Architecture & Integration
                                                                     View 7:
          View 1: Banking Business Segment
                           &
                                                         View 3:
          View 2: Product & Process Lifecycle            Bank Management
                                                         Functions & Processes

                                                         View 7: Enterprise
                                                         Architecture & Integration
       View 7: Enterprise Architecture & Integration
                                                         View 3: Bank Management
                                                         Functions & Processes

                 View 7: Enterprise Architecture & Integration



                                                                                      24
Unified Banking Process Framework Model – Views 8 to 10
                                   REGULATORY BODIES
                       Customers / Market Participants (internal, external)

                                               BANK
          1.    Banking Business Segment View: Customers, Products and Services for
                          Investment, Corporate, Private, Retail Banking

                     2. Product &         3. Bank Management Functions                4. Data
                  Process Lifecycle               & Processes View                Lifecycle View
                         View
      Process




                                          Middle Office services supporting the     Data used to
                 Knowledge of end-to-     life cycle –                               implement
                 end process life cycle           Compliance                         business
                  based on specific               Risk Management                    products,
                  banking products.               Product Control                processes, rules
                                                  Accounting                      and analytics

                  5. Software Systems
                  6. Channel Delivery & Channel Infrastructure View
                  7. Enterprise Architecture & Integration View
                  8. Organization and Sourcing View
                  9. Process Performance View
                  10. Total Cost of Process Execution View
                  11. Change Scenario & Impact Tracing View




                                                                                                     25
Outsourcing & Insourcing for a Bank and UBPF View 8




                             8. Organization and Sourcing View


                        Outsource                                     “What”                     “How”
                   • to external third party                  • IT operations &            • Location specific
                                                                service delivery
  “The Bank”                                                                               • Country based




                                                 IT related
                                                              • Software development         hubs
                                                                & maintenance
                                                                                           • Regional /
                          Insource                            • Enterprise architecture,
  can choose to…                                                                             globalised hubs
                                                                software application
                   • by bringing IT operations                  design
                     back in-house                            • Operational processes
                   • by providing IT services                   for banking product &
                     for other financial                        service delivery
                     services institutions




                                                                                                               26
                                              8. Organization and Sourcing View

                                   Service Sourcing          “To-be” Options for Sourcing
                       “As-is” Options ofProvider for the bank’s own customers
  Sourcing


                       • Where is it physically located?                       • Where should it be physically
  Options


                       • Where is it organizationally                            located?
                         located?                                              • Where should it be
                       • What is the current sourcing                            organizationally located?
                         model?                                                • What should the sourcing model
                                                                                 be?
                                       2. Product &                 3. Bank Management Functions              4. Data Lifecycle
Impacted by Sourcing




                                  Process Lifecycle View
  Technology Views




                                                                           & Processes View                         View
   UBPF Process &




                                   Knowledge of end-to-end      Middle Office services supporting the life
                        Process




                                                                                                                  Data used to
                                  process life cycle based on   cycle –                                      implement business
                                  specific banking products.            Compliance                          products, processes,
                                                                        Risk Management                      rules and analytics
                                                                        Product Control
                                                                        Accounting

                                   5. Software Systems
                                   6. Channel Delivery & Channel Infrastructure View
                                   7. Enterprise Architecture & Integration View

                                                UBPF goal:
                         Assist T&O Professionals in assessing sourcing options and
                         how the UBPF process & technology views (2 through 7) are
                                     impacted by the sourcing options
                                                                                                                             27
                                                              8. Organization and Sourcing View
                                                                           Outsourcing Options
                                                          Localised                                  Regionalised / Globalised

                         Description
  Operations & Systems


                                        Processes & Services performed by third-        Full or partial processes & services performed by a
  Sourcing Options for




                                        party vendor - LOCALLY                          third-party vendor - REGIONALLY or AT A
                                                                                        GLOBALIZED HUB

                                                                            Insourcing Options
                                                                                                                      Service Provision
                                                  Localised              Regionalised /Globalised
                                                                                                                       for other banks
                                                    Service Provision for the bank’s own customers
                          Description




                                                                                                                       (White Labeling)
                                        Processes & Services           Processes & Services performed        Full or Partial processes or
                                        performed internally by        internally by bank--- AT ONE OR       services performed by bank for
                                        bank-- LOCALLY                 MORE GLOBALISED HUBS                  other banks

                                                       2. Product &                3. Bank Management Functions               4. Data Lifecycle
                                                  Process Lifecycle View                  & Processes View                          View
UBPF Process &

Views Impacted



                                        Process




                                                   Knowledge of end-to-end
  by Sourcing




                                                                                Middle Office services supporting the life
  Technology




                                                                                                                                 Data used to
                                                  process life cycle based on   cycle –                                      implement business
                                                  specific banking products.            Compliance                               products,
                                                                                        Risk Management                       processes, rules
                                                                                        Product Control                        and analytics
                                                     5. Software Systems                Accounting

                                                     6. Channel Delivery & Channel Infrastructure View
                                                     7. Enterprise Architecture & Integration View
                                                          UBPF goal:
                           Assist T&O Professionals in assessing sourcing options and how the UBPF
                         process & technology views (2 through 7) are impacted by the sourcing options
                                                                                                                                                  28
                                                                          8. Organization and Sourcing View

                                             Examples of Insourcing Models Commonly Found for Specific Operations & Systems
Sourcing Options and UBPF Views Impacted

                                                                  Internal -          Internal -           External -       Service Provision
                                                                  Localised         Regionalised/         Outsourced         for other banks
                                                                                     Globalised                             (White Labeling)




                                                                                                                                                 Illustrative examples within each cell of matrix
                                           2. Product &        • Loan              • Trade Finance     • Local Cheque       • Custody Services
                                              Process            Processing          Processing          Clearing           • Payment Services
                                                                                   • FX Settlement
                                           3. Bank             • Product Pricing   • GL Accounting &
                                              Management         (Middle Office)     Reconciliation
                                              Functions &      • Regulatory        • AML Monitoring
                                              Processes          Reporting
                                           5. Software         • Local Payment     • GL System         • Invoice Matching   • Internet Banking
                                              Systems            System            • Compliance          System               System
                                                                 (RTGS)              Systems           • DATA CENTRE        • FX System
                                           6. Channel          • Teller            •Internet Banking   • Mobile Banking
                                              Delivery &       • ATM
                                              Channel
                                              Infrastructure
                                           7. Enterprise                           • Application       • Data centre
                                             Architecture                            services via        outsourcing
                                             & Integration                           Cloud             • Application
                                                                                     Computing           services via
                                                                                                         Cloud Computing




                                                                                                                                                                                             29
         9. Process Performance View

Examples of Process Performance Indicators


1. Service Levels (metrics, agreements)
2. Productivity (metrics)
3. Time (cycle times, critical time constraints)
4. Quality (nature of errors, impact of errors, quality measures)
5. Capacity (throughput measures, levels, constraints)


Process Performance Risk and Continuity Considerations


1. Impact of disruptions on process performance items (listed above)
2. Continuity (anti-disruption) counter measures




                                                                       30
       10. Total Cost of Process Execution View

Total Cost of Process Execution (or Total Cost of Process Ownership)

                     Channel Expenses
                                                          Cost is allocated,
      Front Office Expenses ( Sales / RM / Product ).     per product and
                                                          customer segment
                  Middle Office Expenses


       Operational Transaction Volume & Unit Cost
                                                          Transaction level
         Systems Transaction Volume & Unit Cost           costing
               (Insourced or Outsourced)

             Outsource Transaction Unit Cost

         Product                        Customer          Items above are
     Profitability View              Profitability View   incorporated into
                                                          these profitability
         Bank / Branch Location Profitability View        measurements



                                                                                31
         11. Change Scenario & Impact Tracing View



                                                                             UBPF Goal:
                                                                             Assist T&O and
                                                                             Business
                                                                             Professionals in
                                                                             assessing the
                                                                             impact of Change
                                                                             Scenarios on
                                                                             UBPF Views 2
                                                                             through 10



                           Change Scenario Examples
•   Market and customer needs changes       •   Process re-engineering & operational
                                                efficiency changes
•   New product introduction
                                            •   Legacy systems integration to support
•   Regulatory changes
                                                business process change
•   Internal control & compliance changes
                                            •   Outsourcing or globalisation of processes or
•   Organisation changes                        Systems
•   Growth driven changes                   •   Adoption of emerging technology
     –   Emerging market expansion          •   Technology refresh - application software
     –   Merger & acquisition                   version upgrades



                                                                                                32
The Body of Content for the UBPF




  Views / Segment       1   2   3     4     5   6    7     8   9   10   11

Investment Banking &
   Capital Markets
                         Version 1
     Corporate &                            Work
Institutional Banking   Completed                        Current & Future
                                             In
 Private Banking &      - Ongoing                         Development
                                          Progress
Wealth Management         Review
   Retail Banking

                                     Development Status

                                                                             33
UBPF Challenges Going Forward
1.    Going beyond the current “proof                    4.   Meeting the needs of T & O users
      of concept”                                             for collaboration and decision
                                                              making
2.    Resources and prioritization for
      next phase of content
      development                                        5.   Dimensionality
      – For Bank T & O projects &
        ongoing needs
                                                         6.   Keeping the content EASY TO
      – For Vendor projects & ongoing
        needs                                                 USE as the “body of content” gets
      – For our MITB (Financial Services )
                                                              more complex
        curriculum

3. Scope and scale of content across
   all 4 segments of banking
     Investment    Corporate        Private
      Banking &         &          Banking &    Retail
       Capital    Institutional     Wealth     Banking
       Markets      Banking       Management




                                                                                                  34
The SMU SIS Banking Industry initiative develops
skills in Banking Technology across different levels
     Retail       Investment        Singapore Management University
    Banking        Banking,
                Capital Markets
                                      School of Information Systems
                                    Banking Technology & Operations
           Unified                             Programme
          Banking
          Process                              Masters Level
         Framework
                                        Professional Short Courses
    Private       Corporate &
   Banking &      Institutional
  Wealth Mgmt       Banking                Undergraduate Level


                Joint effort to develop IT professionals
                        for the banking industry
                              ATTRACT
                              PREPARE
                                RETAIN

                                                                      35
Roadmap for MITB (Financial Services) Course Expansion Over
2009-2011 Time Period
      Financial Services Track Courses                            MITB Common Courses
  Banking Processes, IT & Architecture Courses               IT and Project Management Courses

A1. Banking Products and Processes                     C1. IT Governance & Innovation Management

A2. Retail Banking Technology: Processes, IT &         C2. Spreadsheet Modeling for Technology &
   Architecture                                          Operations Decisions
A3. Corporate & Institutional Banking Technology:      C3. IT Project & Vendor Management
   Processes, IT & Architecture
A4. Financial Markets Technology: Processes, IT &      C4. Global Sourcing of Technology & Processes
   Architecture (*)
A5. Lifecycle Implementation of Banking Products (*)            General Management Courses
                                                                for Technology & Operations
A6. FS Operational Risk: Foundation & Framework        D1. Accounting for Technology & Operations
                                                          Managers
A7. FS Operational Risk: Data, Information, System     D2 Strategy & Organization
   and Architecture (*)
                                                       D3. Finance for Technology &Operations Managers

                                          Capstone Project- 2 course units


                             ( * ) = new courses being developed
                                                                                                         36
Mapping MITB (Financial Services) Processes, Data, Solutions &
Architecture Courses to UBPF Views




               UBPF View                   1   2   3   4   5    6    7   8   9   10   11

 Banking Products and Processes                                                   
 Retail Banking Technology: Processes,
 IT & Architecture
                                                                               

 Corporate & Institutional Banking
 Technology: Processes, IT &                                                   
 Architecture
 Financial Markets Technology:
 Processes, IT & Architecture
                                                                               

 Lifecycle Implementation of
                                                                                 
 Banking Products                                                  
 FS Operational Risk: Foundation &
                                                                                     
 Framework                                                            
 FS Operational Risk: Data, Information,                            
 System & Architecture
                                                                                 

                                 = New MITB (FS) courses under development
                                                                                           37
How the Industry Can Support SMU SIS Educational
Programmes in Banking Technology & Operations
                                            MITB Programme
                                       • Co-development on parts of
                                         curriculum (includes UBPF
                                         examples, labs)
                                       • Capstone project sponsorship
                                       • Scholarships/awards
                                       • Enrolment of current staff in
                                         programme
                                       • Hiring, talent recruitment

Industry Seminars & Workshops              BSc (ISM) Programme
for either MITB (FS) or BSc (ISM)
                                       • Co-development on parts of
                                         curriculum
• Participation in our seminars &
  workshops as industry practitioner   • Internship for students
• Host site visits, and/or on-site     • Scholarships/awards
  special seminars for our students    • Hiring, talent recruitment


                                                                         38
SMU SIS Professional Short Courses for Banking T & O:
Execution Approach
 Professional Short Courses
 • We can create professional
   short-course versions of the
   existing banking T & O related
   courses in our Masters and
   Bachelors programmes

                                    SMU MITB (FS)
SMU BSc (ISM) Banking               Programme Curriculum
Processes & Solutions Track




                                                           39
Significant Contributors to the UBPF
Faculty, Staff & Adjuncts of the SMU School of Information Systems
     •      Steven MILLER               •     Enoch CH’NG
     •      Sajeeve THOMAS              •     Michelle CHEONG
                                        •     Randall E. DURAN
                                        •     Sandeep LAL
                                        •     NG Peng Khim
                                        •     SAM Anne Me
                                        •     YEO Loy Khim


From the Global Banking & Technology
         • We would also like to acknowledge other Banking Technology & Operations
           (T&O) experts and line-of-business experts who choose to remain anonymous


Other Banking Industry Contributors
         • The Infosys Finacle Product Team
    Significant Contributors to the UBPF (cont’d)
The Financial Services Technical Committee of the Singapore National
Infocomm Competency Framwork (NICF). They reviewed, enhanced and
adapted concepts from the initial SMU Banking Process Framework.

•   Eric CHIA, Goldman Sachs                 Sponsoring Agencies of the
                                             Singapore National Infocomm
•   CHANG Chew Lik, NCS
                                             Competency Framework:
•   CHONG Tack Chun, IDA
                                             • Infocomm Development
•   Patrick EARDLEY, Barclays Capital          Authority of Singapore (IDA)
•   Gabriel GOH, Citigroup Corporate         • Singapore Workforce
    Investment Banking
                                               Development Agency (WDA)
•   Kishore KAPOOR, i-flex Solutions
•   LIM Lai Ling, UOB Group
•   Steven MILLER, SMU SIS                   Consultants to the Committee
•   NG Peng Khim, Citi  DBS
                                             PricewaterhouseCoopers LLP
•   SEE Chim Tiam, Merrill Lynch Global       •   Thyag VENKATESAN
    Services                                  •   Xavier BAUDEZ
•   SHEE Tse Koon, Standard Chartered Bank


                                                                              41
                     Thank You
For more information about our
• Unified Banking Process Framework (UBPF)
• Master of IT in Business (Financial Services) programme
• Undergraduate concentration track in Banking Process & Solutions
  in the BSc (IS Management) programme


                 Please contact us at
              sis_masters@smu.edu.sg

                                                                     42

				
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