Using Benchmarking and Performance

Measurement to Enable the Journey to

World-Class Shared Services

Sept 2010

Presentation for

13th Annual Asian Shared Services & Outsourcing Week

Scope International supports operations across 70

countries across the globe

� Scope International encompasses software and systems development, wholesale

and consumer banking operations, contact centre, I.T. and Helpdesk services.

Example of countries covered by Operations

Malaysia ranked No.2 in the list of Top Outsourcing

countries 2010

� Each country has been scored across dozens of key statistics which fall into three broad areas of Cost Competiveness, Resources & Skills, and Business & Economic Environment.

Source: SourcingLine

There are over 130 Shared Services & Outsourcing

companies in MSC Malaysia

� Main factors which attracts Shared Services to Malaysia are well-educated and multi-lingual workforce, a world-class infrastructure at lower cost, as well as a conducive business environment.

� Government infrastructures which are ICT conducive.

• KL: 87% speak English

• 50,000 educated

overseas every year

• 5.5% wage inflation, 5% attrition

• Low cost of high value

workers

• Low infrastructure

costs

• No hidden costs

• Low start-up costs

• Low inflation rates

•Stable popular

government

•No natural disasters

•Robust economy

•Excellent cost of living

vs. quality of life

People Cost Environment

Source: MSC Malaysia

• Tax benefits

• Immigration support

• Coordination

• Bank’s footprint in Asia

Pacific, Middle East and

Africa

• KL main hub for Asia

Pacific and Eastern

countries

• Chennai main hub for MESA

Government Geography of Business

Scope International Banking Operations

� Banking operations ensures all aspects of our business

run as efficiently as possible at the most competitive cost level and aligned with the Group’s strategic intent.

� Managing operations is about:-

� Driving standardisation of services and processes

� Cross border/ virtual processing

� Expanding overall approach to hubbing

� Productivity gain through automation and reengineering initiatives

� Overall operations is aimed at increasing productivity by maintaining low operating cost.

Business Goals Integrated with Key Performance

Indicator to Benchmark Performances

� Key Performance Indicators (KPI) are performance measures aligned with business strategy, work

environment, and employee incentives.

� For instance, in Banking operations the KPI incorporates

7 major metrics:

1. Transaction volumes versus availability of resources/ premises/ new migrations

2. Headcount versus volume

3. Error/ Services/ SLA/ Backlog

4. Productivity gain every year

5. Cost Management

6. Revenue

7. Revenue and Cost per Staff

Using Productivity in Benchmarking Performance

� Performance is evaluated through Productivity.

� Productivity is derived from:

� Productivity is used as a key indicator to output from a

production process, per unit of input.

� Tactical goal is to increase productivity by maintaining

cost.

� Following diagram shows sample of year on year

increasing in productivity while maintaining a flat cost

Transaction Volume X Cycle time

Number of processing headcount

Cost efficiency is reflected by increasing

productivity vs a flat operating cost

0

20

40

60

80

100

120

140

2007 2008 2009 2010*

P ro duct ivity C o st P ro duct ivityT hresho ld

Example of Productivity vs Operating Cost

The jaw between operating cost

and productivity increasing 10%

year on year. This shows that

per unit transaction is cheaper in 2010 compared to 2007. This

gives the bank an competitive

edge in the market.

Productivity

Cost Efficient Model

Shared Services cost

efficient model

encompasses:

Maintaining a flat FTE

growth against growing

transactions volume

Reducing or maintaining

cost per FTE. Cost per

FTE is full cost of

operating which includes

cost of communication,

premises, overhead etc

Examples of initiatives which translates into flat FTE growth.

� Eliminate manual processes

� Reduce processing cycle time

Examples of initiatives which reduces cost per FTE.

� Implementation of scalable technology

� Deskilling of complex processes

Delighting the customers

� The best quality strategy is to develop life-long customers by continuously delighting

and surprising them ahead of the competition.

� Following are among the initiatives used to benchmark customer satisfaction:

Voice of Customer

Survey

Voice of Customer

Survey measures

customer satisfaction

of our services.

Reducing errors YOY

by 30%

Tracking errors trend

to delight customers

Strategy Metrics

2006 - 2010

Volume vs Error

0

2000

4000

6000

8000

10000

12000

2006 2007 2008 2009 Runrate

2010

Vo

lum

e (

'000

)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Err

or

per

10

K

Actual Volume 2010 runrate volume Error per 10K

VO C Corre sponde nts

1.00

2.00

3.00

4.00

5.00

XXX Y Y Y ZZZ PPP QQQ

Using benchmarking to manage risk

� Benchmarking risk metrics to manage risk

� Example:

� People risk: Tracking rolling attrition. Have semi trained processes in pipeline to buffer attrition when it hits threshold.

� Business Continuity Plan: To have multiple processing site to sustain business in case of downtime.

� To have risk governance framework to ensure regular audit of processes.

Mandatory Committee Required by SCB Group

Board-level committees (such as an Audit Committee, Board Risk Committee, Remuneration Committee and/or Nomination Committee) are not part of the Group control framework, and the Group does not require them to be established.

We have this structure at the GSSCs

Governance Framework overview

Model Committee Structure as mandated by Group for subsidiaries

12

Group Level

Business

/Function Level

Country Level

ORMAF - Governance

Business / Functional Operational Risk Group

(BORG)

Business Operational Risk Committee (ORC)

Group Operational Risk Committee (GORC)

Group Risk Committee (GRC)

Country Operational Risk Group (CORG)

Functional Operational Risk Committee (ORC)

Alignment with the Group model for Operational Risk Governance

13

Risk Management & Reporting

Proactive

Risk Management

14

Example of Benchmarking through Performance

Metrics

Operational Loss:

Loss Amount vs Loss Count

0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 YTD June

2010

Lo

ss A

mo

un

t (U

SD

'000)

0

20

40

60

80

100

120

140

160

Lo

ss C

ou

nt

Ops Loss (USD '000) Ops Loss Count

2006 -2010 Performance:

Volume vs Error

0

2000

4000

6000

8000

10000

12000

2006 2007 2008 2009 Runrate

2010

Vo

lum

e (

'000)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Err

or

per

10K

Actual Volume 2010 runrate volume Error per 10K

2006 - 2010

Transactions Per FTE vs Headcount

0

2

4

6

8

10

12

14

16

18

2006 2007 2008 2009 Runrate

2010

Tra

nsacti

on

per

FT

E (

'000)

0

100

200

300

400

500

600

700

FT

E

Transactions per FTE Headcount

F i n an c ia l P e rfo r m an ce : 2 00 6 - 2 0 0 9

-

1 .0

2 .0

3 .0

4 .0

5 .0

6 .0

7 .0

8 .0

9 .0

1 0 .0

1 1 .0

1 2 .0

1 3 .0

1 4 .0

1 5 .0

1 6 .0

2 00 7 20 0 8 20 0 9

Co

st

(US

D M

io)

-

0 .2

0 .4

0 .6

0 .8

1 .0

1 .2

1 .4

1 .6

A c tu a ls (U S D m io ) F o re c a s t (U S D m io ) S tre tc h (U S D m io )

Appendix

� Inducting fresh graduate in organisation (SIMA)

� Business Continuity Plan (BCP)/ Virtualizing BPO

SIMA

� Scope International Malaysia Academy (SIMA) is the

training academy for Wholesales Banking Operations of

Scope International Malaysia.

� Started off in 2007 and was known as School of Trade as

it covered only Trade module but was soon expanded to

other modules in WBO and renamed SIMA

� Objectives:

� To create a rich pool of knowledge workers for the

Malaysian economy

� To train knowledgeable and highly skilled workers for

Malaysia’s financial sector and other related

industries

� To nurture dynamic and talented financial

professionals

� Our target is to produce 700 students by end of 2010

� Moving forward, SIMA will be extended to cover

Consumer Banking Operations, Technology and Contact

Centre streams

The Business Continuity journey/Current State

2001 – 2002 Tactical 2008 -Transformational2003 – 2007 Strategic

18