The Hindu Business Line : No scale-back of growth plans: Scope

Chennai, Oct.3 Scope International, the wholly owned subsidiary of Standard Chartered Bank, UK, began BPO operations for the group in 2001. In seven years, Scope has grown to over 6,500 employees and provides back-end services to most of the 70 countries where the Standard Chartered Group has a footprint.

Scope handles a range of value-added and complex services, from banking operations to supporting global HR processes, Finance and Accounting services, software development and maintenance, for the Group globally.

Mr P.K. Raman, Head of Consumer Banking, one of the seven ‘verticals’ at Scope, spoke to Business Line about the operations in his division that processes transactions for 13 countries where SCB has operations, including India, Hong Kong, Singapore and the UAE. This division has 700 people working in it.

Mr Raman is a Chartered Accountant, ICWA and a CIMA graduate with over 20 years of work experience in the banking and auditing field. Prior to joining the SCB Group, he worked in KPMG Bahrain in their audit consultancy division. In SCB, he has worked in Risk Management, Wholesale Banking Operations and now Consumer Banking Operations. Excerpts from the interview:

What does your division do for Standard Chartered Bank?

We offer all kinds of back-end processing for a full range of products — credit card, liability products, investments, mortgages and insurance.

We have three sub-divisions within consumer banking: account opening; financial transactions— anything to do with debits and credits in an account; and customer non-financial or static data maintenance (for example, change of address or other changes that happen in the life cycle of an account)

When a customer walks into a bank branch anywhere in these 13 countries and wants to open an account or have a credit card or mortgage, he fills up an application form. That form lands here. We input the data into the system and operationalise that requirement here. So, if it is a credit card application, we help in generating a card or a PIN that is handed to the customer based on the data. The back-end work is done here.

What constitutes back-end?

Anything that is customer-facing is front-end. That means anything that is done till the product is sold or deal done is front-end. Anything done after that is back-end. For example, money collected on a term deposit at the branch would be front end. But the FD form is sent here and the receipt and then the interest calculations are done here.

What have been the savings for Standard Chartered Bank by having this hub in India?

I think the figure is about $80 million. But that is not the only thing. In any business process outsourcing operation, cost arbitrage is very important in the first two years. In the first year, the cost comes down, say from 100 per cent to 30 per cent. So everyone is happy. The euphoria continues in the second year also. But after that, every one is being measured on 30 in that country. The knowledge of what was before is forgotten.

So, what after that?

After three or four years, the focus moves from cost arbitrage to efficiency. The question that is often asked is — “We do this here with 10 people. Can you do this with eight people?” Initially, when you shift operations the comparison between 10 people there and 10 here may give you a good cost arbitrage.

But when the numbers come down here, it may not give the same degree of savings. But they believe that with scale you should become more efficient. And after four to five years, they start looking at standardisation, process innovation, automation and thought leadership.

Will your operations be affected by the slowdown and banking crises worldwide?

Our (SCB’s) concentration of business is in emerging markets and Asia — not in the US or Europe. Strategically, we have been insulated from a direct impact as far as the sub-prime crisis is concerned. There will be indirect consequences because the whole financial sector is suffering. Our profits were good and we are on track this year also. SCB was among the few banks that posted a 30 per cent growth in profits in the first quarter. We need to be cautious. But there is no scale-back of growth plans.

What are your hiring plans?

Our growth plans are linked to the group’s growth plans. Efficiency parameters have started to kick in. Increasingly we are looking at doing more with less people. We are also trying to use more technology-based solutions — for instance, we are trying to eliminate multiple entries of the same data. We are also trying to see if we can get the data entry done by the customer through Web/mobile and have it uploaded electronically — so that even unnecessary data entry is saved.

If you had a standardised process across the group, won’t it save a lot of effort at your hub?

Typically, in any organisation, if you have to launch a product, there is a trade-off between speed-to-market and standardisation. If a product has to be launched, we have to look at how much time it would take if we use a local system and whether we should wait for the entire group to launch a similar product in other countries and use a common process.

In consumer banking, speed-to-market is very important. But that can also create inefficiency — in hubs like this where we process transactions for many countries. It is a journey every one has to undergo. There is, of course, a central team in Singapore which looks constantly at standardisation and reengineering issues.

But these are journeys that we have to make and it has to tie in with technological changes, with what the customer wants and also the requirements of regulations that also vary from country to country. For instance, in Singapore, you can fax your credit card application. We can’t do that here; we have to get the signature of the customer in person.