Banking in a Digital Age
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Keywords: ntuc Income insurance cooperative limited
Q1. What types of Information Systems and business processes were used by NTUC before migrating to the new digital systems? What were the problems associated with the old systems?
Before migrating to the digital systems, NTUC Income relied on EBao Technology. This consisted of:
- HP3000 mainframe hosted the core insurance applications as well as the accounting and management information system.
- The COBOL program maintained by Income’s in-house IT team.
One of the issues observed with the old system was the Business process, transaction processing for policy Underwriting was a batch process and information was not available to agents and advisors in real time. Voluminous documents were manually sorted and stored in warehouse, retrieval of same took days to accomplish resulting in lost opportunities and cross sales.
Another concern with COBOL was launching new products ranged from a few weeks to months resulting in decreased productivity and revenue and wasted manpower hours.
The HP 3000 frequently crashed coupled with hardware failures resulted in many downtime days. Incomplete daily data was a costly and tedious process.
The biggest difficulty faced was the many possible breaches in data protection resulting from their systems reliance on paper forms and manual storage and retrieval of all documents.
Q2. Describe the digital systems capabilities at NTUC after migrating to the new system.
How did the systems resolve their problems? Explain.
NTUC was in a crisis and needed to change. In order to power engines forward, they used Digital Systems. Best energy is a crisis. (Stapleton, Digitial technology in financial services, 2015) Income switched to the Java-based eBao Life system in 2003. This new software comprised three subsystems. Policy Administration, Sales Management and Supplementary Resources. This change from paper to digital systems immediately solved the problem of agents accessing clients’ files in real time. This resulted in the many cross sell opportunities that were previously lost, being opened up. (See fig 1)
It also allowed Tan to push his company forward in terms of generating business as “telecommuting staff members had faster access to information, almost as fast as those in the office.” (Stapleton, NTUC Income, 2015)This push forward by Tan is a prime example of good customer relationship management as it addresses all their marketing sales and services with their customer at the core. (see fig 2) (Laudon and Laudon, 2014) The improved methods for generating business had an instantaneous effect on NTUC’s profitability as is evident in the case study.
The new digital system vastly improved the process of developing and launching new products. The company moved from waiting weeks or months for a product launch to just a few days with the new system. Coupled with accessing customer information in real time this allowed targeted smart selling practices, selling the customer what they needed rather than product pushing. (Bibby, 2012)
The HP 3000 systems meant agents of NTUC were frequently experiencing system failures resulting in lost revenue and a loss of trust in their system. The eBao technology solved two of the issues NTUC were facing. Firstly a real – time hot back up disaster recovery centre was implemented, meaning in the event of a system failure operations could be switched quickly to the disaster recovery site without the need to rely on the restoration of previous day data (Stapleton, NTUC Income, 2015). Secondly, with the destruction of paper forms and storage systems in favour of online alternatives and a hot back up recovery centre, the company are less likely to breach data protection laws.
Q3 Speculate on how the new digital systems provided a basis for the “Orange” strategy. Could Orange have been possible with the old systems? Explain.
The new digital systems provided an opportunity for Income that Tan Suee Chieh seized with both hands. He had foresight to realise Big Data is what a company needs to provide tailored products to its consumers (Brad Brown, 2011). Although what NTUC had access to would not be considered Big Data in today’s digital world, it was a major step up from the paper based system they had.
Tan began the transformation to digital systems by first introducing what he called “cultural revolution.” In response to the success of his company he responded “it rested on cultural change, and by culture I mean people’s attitudes and behaviour. We were extremely strong in values like trust, but we needed to be much better in terms of professionalism and adopting a more dynamic or commercial approach towards running the business.” (Bibby, 2012)
Tan understood that as a leader he needed to change the culture within his organisation, however he realised in order to do this he could not look at “changing culture” instead he needed to focus on a business problem and then assess how culture within the company would help or hinder this (Schein, 1985). With Income, the problem was obvious, their dated storage and paper based systems were holding them back from becoming the world leading insurer Tan envisioned. Tan used his four years’ experience from Incomes board of directors and his twenty years’ experience with Prudential to aid his assessment of culture within the company (Bibby, 2012).
Once the Cultural Revolution had been well established, Tan began his Orange revolution. This was about “doing things differently” and “changing the rules outside the company, and change the way the game is played in the insurance industry” (Bibby, 2012)
Orange Force was one of the first “Orange moments” Tan had. These brightly coloured motorbikes were only made possible because of the introduction of the wireless technology system brought in to replace paper based ones. The introduction of these technologies meant systems were always accessible, a crucial feature for Orange Force who required access to customers insurance records at the roadside.
Orange Speak is centred on putting customer needs first and ensuring customers get a “fair deal”. This aspect of the orange revolution focuses on customer centricity, a factor that is still promoted on the Income website. They promote the fact their 7 branches assist 1,400 walk in customers and 2,500 phone calls on a daily basis. These interactions are aided by the fact any advisor can access customer records quickly and securely to deal with each customer’s individual need. Orange Speak is another aspect of orange revolution that would not be possible without digital systems. The implementation of these digital systems meant information became available to advisors in real time. This allowed for opportunities to cross-sell according to consumer needs and only target products consumers needed not the ones that helped agents meet their sales targets. Income were now able to become smart in the way they handled their data, they could now pair advisors and customers according to need and specialism, a chore that would have been arduous with a paper based system.
In recent years, orange revolution has focussed on expanding its value added services such as the motor service centre and their new born gift initiative (Income, 2015). The abolishment of paper in favour of digital has clearly improved profits at Income (Stapleton, NTUC Income, 2015). By reinvesting some of these profits back into his company in the form of Value Added Services, Tan is ensuring his company remains a global leader and maintains their reputation of putting the customer first.
Q4. Set out three important lessons for Irish retail banking can be drawn from the NTUC case study. What are the implications of these lessons for your bank?
- CUSTOMER CENTRIC.
Clearly evident from the Case study, prior to the migration to the digital web-based system, NTUC customer care was low priority. From inception to execution the customer process was tedious, lengthy and impersonal. The client profile was minimal resulting in staff being unable to ascertain whether the prospect was new or existing. NTUC had the foresight to acknowledge that change was needed to ensure success.
In a recent recorded lecture on the topic of CRM, Dr Larry Stapleton said “what we want to be able to do is track and analyse how the firm interacts with its customers.” NTUC has provided us with the evidence that this methodology is something that must be considered to the highest degree by businesses in today’s environment. (Stapleton, Digital Systems and the Customer: Customer Relationship Management Systems 1, 2015)
The implications of this for our Bank are that in order to survive and gain the competitive edge, we need to prioritise the customer each time every time. Our competitors can offer similar products and price and promote online switching deals, however, it’s through service and anticipating their needs that will gain us the edge and win. We need to have a deep understanding of our customers and have the ability to analyse vast amounts of data on their behalf.
By moving from paper based HP3000 to the online digital systems of Ebao, NTUC have significantly improved the security of their clients data. All forms are now stored digitally and are backed up electronically reducing the risk of loss and misplacement.
A study by Galliher et al in 2008 gives strength to the argument that NTUC are now less at risk of security breaches by using digital forms. Galliher compared results of 60 volunteers, 30 completing paper forms and 30 completing electronic, the results showed only 3% of those gathered electronically had errors, compared to 35% of those gathered on paper. (James M. Galliher, 2008)
Currently, our bank still relies on paper based lending applications prior to submission for approval. These forms then have to be manually filed into binders by advisors. This provides numerous opportunities for error, omission and misplacement. The department for finance has since 2009 been promoting paperless banking, heralding the work of Danske Bank who went completely paperless in 2006 and reaped the rewards in terms of cost saving and improved customer satisfaction. (Finance, 2009)
- INTREGATION OF SYSTEMS
By moving to their new platform Income clearly had set a strategy to achieve Competitive advantage and by applying Michael Porter’s competitive forces we can undoubtedly understand the importance of the firm’s environment. (Fig 3)
The single view approach facilitated more products and coupled with the customer centric design ensured New Entrants and Customer forces were complied with as now the profiling could distinguish whether the clients were new of existing. By providing a platform for New Orange strategy, this gave the very important competitive edge and improved customer service.
Through the integration of NTUC’s systems, they were successful in irradiating Porters five forces. This is a lesson we could look into in our bank as the threat of substitution, new entry, competitive rivalry and supplier power are still a very real issue for us.
Bibby, A. (2012). Profile of a chief executive. Voice Magazine.
Brad Brown, M. C. (2011). Are you ready for the era of "big data"? McKinsey Quarterly.
Department of Finance. (2009, 06 05). Finance gov ie. Retrieved from http://www.finance.gov.ie/sites/default/files/NIBrespon09_0.pdf
James M. Galliher, T. V. (2008). Data Collection Outcomes Comparing Paper Forms With PDA Forms in an Office Based Patient Survey. Annals of Family Medicine, 154-160.
Kennetch C. Laudon, J. P. (2012). Management information systems. Harlow: Pearson.
NTUC Income. (2015, Apr 01). NTUC Income. Retrieved from http://www.income.com.sg/
Schein, E. H. (1985). Organizational Culture and Leadership. San Francisco: Jossey-Bass Inc.
Stapleton, D. L. (2015). Digital Systems and the Customer: Customer Relationship Management Systems 1. Banking in a Digital Age. Dublin: Institute of Bankers.
Stapleton, L. (2015, February Sat 7th). Digitial technology in financial services. Dublin: Institute of Bankers.
Stapleton, L. (2015). NTUC Income. Dublin: Institute of Bankers.
 Diagram taken and adapted from Laudon and Laudon, 2014 page 385
 Diagram taken and adapted from Laudon and Laudon, 2014 page 382
 Diagram taken and adapted from Laudon and Laudon, 2014 page 124 and 125
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