MBC Case Study Release 1.2

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IT Strategy at Mississauga Banking Corporation (MBC)

A Case Study

Anveshika Shrivastava

Faculty: Global Strategic Sourcing

Symbiosis Centre for Information Technology

Release 1

Published by Anveshika Shrivastava, November 2011

Copyright 2011 Anveshika Shrivastava All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the copyright owner. This case study is a work of fiction, created for academic purposes and any resemblance to real life entities or corporations is purely coincidental.

Anveshika Shrivastava | MBC Case Study - GSS 2011 2

Table of Contents 1. Background ............................................................................................................................................................................. 3

1.1. Existing (Selective) Organizational landscape .............................................................................................................. 4

1.1.1. Branch Aid Units (BAU) ............................................................................................................................................... 4

1.1.2. IT Group (ITG) .............................................................................................................................................................. 4

2. Customer Support Services ..................................................................................................................................................... 5

2.1. Major customer support processes ................................................................................................................................. 5

2.2. Request Frequency (Monthly) and Typical Resolution Timelines .............................................................................. 7

2.3. Existing BAU Details Support Staff /Location /Request Influx ................................................................................. 8

2.4. Voice of customer ......................................................................................................................................................... 8

2.5. Voice of MBC employees ........................................................................................................................................... 10

3. Existing System Landscape high level ............................................................................................................................... 11

3.1. Existing BAU/WMO Request Management Process ................................................................................................... 11

4. Conclusion ............................................................................................................................................................................ 12


1. Background Mississauga Banking Corporation (referred to as MBC, here on) was established in the year 1891 in the city of Mississauga by a group of oil entrepreneurs. The Bank projected itself as a customer friendly outfit but essentially a competitive bank through the most of 19th century. It maintained a high degree of liquidity and steadily rose to be one of the major banking organizations in Canada. Growth was exponential with rapid expansion in emerging cities. After the war, riding on the post war expansive economic policies, MBC targeted new markets and entered business banking services. To facilitate this expansion and to maintain their competitive position, in 1951, MBC acquired a majority stake within a regional competitor who was prominent in Quebec, Yukon and other North West territories. For most of the 50s, major organizational initiatives were undertaken to standardize processes and to institutionalize a common culture. After the corporate cultures were amalgamated, the new addition to its ranks helped MBC expand its presence to northern provinces from its existing base in Ontario, Manitoba, Saskatchewan, Alberta and British Columbia. An active PR campaign focused on MBC's traditional 'customer -first' theme - A bank by you, for you, a highly popular slogan. In 1960s, major US banking corporations started making forays into the Canadian market, this caused the MBC to re-assess and streamline its business model. Various market forces such as the increasingly competitive banking industry, and the need to cut operational costs, led the Bank to introduce technology with a view to modernize business processes for most of 1960s. To capitalize on its customer friendly image, the Bank adapted a recruitment and training policy which emphasized on customer support and wealth management. Due to the stress laid on improving internal processes and people centric culture, MBC was able to sustain itself successfully in the recession years of the 80s. With the advent internet in the 1990s, MBC became one of the first banks in the world to offer e-banking. The existent streamlined processes jelled readily and successfully to create one of the world's first integrated banking and broker management/enrolment applications. By the late 90s, through its e banking solution, hosted on its portal, the bank was successfully able to double its customer base, not only in Canada but down south in US as well, from the early 90s and positioned itself as a multi-channel e-enabled global banking organization. Through out the 2000s, the bank continued to exhibit an aggressive approach to market expansion and initiated a spate of banking acquisitions in US, Canada and (increasingly in) Europe. Today, MBC serves more than 6 million customers at over 1200 branches in Canada alone. The company has been consistently ranked in Forbes Global 100 listing and is generally regarded as a employee friendly top employers in the industry. The firm is headquartered at its Mississauga aid unit, City Centre Drive, Mississauga, Ontario X5X 5C7, Canada.

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1.1. Existing (Selective) Organizational landscape

1.1.1. Branch Aid Units (BAU) While the bank is divided into 1200 retail branches, there are 20 branch aid units (BAU) and 1 supervising BAU (Mississauga), servicing a group of retail branches, based on the region and district. The function of BAU is to provide back end support and administrative services to the branches under its jurisdiction.

1.1.2. IT Group (ITG) ITG is the IT services provider group for MBC. It is based across the branches, with its head quarters being the Mississauga BAU.

MBC Headquarters

Mississauga BAU (BAU-0)

BAU ONT2 BAU ONT1

Streetsville Retail Branch (Branch id: BR 24)

Square One Retail branch (Branch id: BR 29)

60, Queen Street Retail Branch (Branch id: BR 21)

Brampton Retail Branch (Branch id: BR 101)

Wealth Management Operations (Niagara

Falls Office)

ITG Director (Mississauga BAU)

ITG Senior Manager IT System Integrations (Mississauga BAU)

ITG Senior Manager IT Infrastructure and mainframe

(Mississauga BAU)

ITG Senior Manager IT Helpdesk and support services

ITG SI Department Software Licenses, query applications,

ebanking (Per BAU)

ITG IM Department Mainframe Operations, HW maintenance

(Mississauga BAU)

ITG HS Department Customer Query Application and support

services (Per BAU)

ITG SI representative branch operations (Per branch)

Figure 1 - BAU -Branch Distribution Sample

Figure 2 - ITG Group - High level set up

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2. Customer Support Services Despite its image as a customer friendly and e-banking major, the multiple systems, brought in due to acquisitions, coupled with a need to sustain its competitive vision, triggered significant problems related to customer servicing systems, threatening its placement as a customer friendly banking organization. Increasingly over the latter half of 2000's the bank's legacy support systems started experiencing extremely ticket influx over day to day customer support issues. Introduction of new wealth management products, with out any customer supporting system, aggravated these problems. There were many customer requests which mandated recording the request at the branch, sending the request to BAU for processing and BAU interacting with third party service providers to service the request and sending the resolution back (through physical mail) to the initiating branch, who then in turn, informed the customer about it. A legacy support system was unequipped to handle and process such requests, except being able to create a support ticket for each complaint. After creation of the ticket, most of the processing was being done through emails between retail branches and BAU. BAU interacted with third party vendors through Faxes and emails. While these request resolution processes were not documented, these processes evolved differently across various provinces. For e.g. customer request A would be handled through different processes by branch 1 in Ontario, compared to branch 9 in British Columbia. Existing customer support systems were in a nutshell outdated, manual, with limited visibility and had significant lead times for resolutions. Lack of standardizations deterred process mapping initiatives as well.

2.1. Major customer support processes In late 2000s, first serious attempts to study and standardize the customer support processes began. An internal study revealed following 6 major customer requests and associated resolution processes (not in order of importance):

1. P1: Joint Account Holder registration process : This process was initiated when a retail customer wished to register a joint account holder to the savings account. While core banking solution was in place, the account holder had to fill out a paper form at the retail branch. The form would then be sent to BAU servicing the branch for evaluating the requests and processing the request through main frame updates. For legal compliance purposes, the paper request form was dispatched to Blue Valley , the physical storage solution provider, a third party vendor. Blue Valley filed the paper form under relevant storage section. At the BAU, after the mainframe was updated to include new account holders records, the authorization letter was dispatched to the requesting branch via physical mail. This letter informed the customer about inclusion of the new account holder in their account and authorized the new account holder to avail services within the bank.

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2. P2: Joint Account Holder deregistration process : Inversely, through this process, primary account holders initiated the process to remove joint holders from their savings account. A Joint Account Holder deregistration request form was filled by the primary account holder for initiating this request at the branch who forwarded it to servicing BAU. A copy of the authorization letter was required to be attached to the paper request. The servicing BAU then sent a fax to Blue Valley to be able to retrieve the original physical copy of the Joint Account Holder registration request form, which was originally submitted for registration of the joint account holder. On receipt of the form from Blue valley, the servicing BAU had to add some deletion details to the request and fax the ITG IM Department (Mississauga BAU) who authorized mainframe deletions through a fax. On receiving the approval, the concerned BAU carried out the de-listing of the joint account holder in the mainframe. An acknowledgement is then faxed to the bank, with instructions to notify the customer about the request being processed.

3. P3: Cash Pull Adjustment process: An interesting issue, faced mostly by customers from the previously acquired banks, this involved a failed transaction at the ATM. A customer might attempt to withdraw the cash from the machine after entering the relevant details. The machine would dispense cash but would pull the cash back into the machine before the customer can collect the cash. To compound the problem, even though the customer would not be able to withdraw the money, the amount would be shown as debited to his account. Anthrop Corporation (AC) is responsible for maintenance and ATM cash management operations. AC While they are working to solve these issues, the customer has to approach the bank retail branch to reverse the debit charges to their account. The customer would fill a paper form, citing the details of the transaction and attaching the transaction slip to the request. After authentication of the transaction details at the retail branch, the form would be sent to servicing BAU, where after request evaluation, the BAU would access Anthrop Corporations (AC) servicing portal to enter the request particulars to check and verify the discrepancy in debit transaction and actual cash dispensation statuses. AC would investigate the issue and notify the servicing BAU operator through an email- about the discrepancy, if any. After receiving the confirmation, the BAU would undertake transaction reversal to credit the wrongly debited amount to the account. The BAU would then notify the requesting branch about the reversal, which would then call the customer to notify.

4. P4: ATM Card Loss / Reissue Process : In cases where the customer looses the ATM Card, the customer would call the banks support line and after confirming personal credentials, would intimate the loss of card to the support staff. The support staff would then block the card by accessing the card vendor SMACARD Org (SO)s support portal and log the loss of card on SOs back end interface which would automatically block the card. Customer would then approach the bank with a request to reissue the card. Customer would populate a card issuance form which would be sent to servicing BAU , who would receive the request, debit a nominal card issuance charge to customers account and access SOs back end support portal to log the request. SO would then render the card and mail it to the indicated mailing address. The BAU would inform the requesting branch about the card reissue request, SOs card request tracking number and probable day of delivery. The branch would then notify the customer.

5. P5: Notarized T56 form process Canadian Tax Agency (CTA) is the agency which governs tax laws for the government of Canada. For the annual tax returns filing, individuals can claim GST tax credits if they can submit a T56 form which includes a summary of transactions, across all saving accounts as an addendum. The T56 form is downloaded by the customer from the CTA website, populated and submitted to retail branch. The form details account information, period of transaction to be recorded and other relevant details. The customer signs the T56 form and submits the form to branch teller. The teller forwards the request and documents to servicing BAU

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which administers T56 form charges and retrieve the transaction history from the mainframe system and attach the history to the T56 form and forward the documents to Mississauga BAU which is the only BAU , authorized by CTA to notarize T56 form. The notary officer at Mississauga BAU receives the documents and performs the notarization after validation of the documents. The notarized form is then sent to requesting branch which informs the customer.

6. P6: Home Loan Rate Adjustments Home loan customers (Wealth Management) would approach the bank to switch their existing mortgage plan to a different mortgage plan for a favourable home loan condition. This process involves creation of a new contract by the bank. The teller at the bank records the request in a form and assigns a date for the customer to revisit the bank to sign the new contract. The teller sends the form and request details to the servicing BAU, which creates the new contract-draft and dispatches the same via physical mail to the teller. On the appointed day, the customer would sign the new contract-draft and submits the form to the teller. The teller would then dispatch the form and other paper documents to WMO (Niagara Falls Office) where an assigned WM operative would evaluate the request and either decline or approve the request. In case of request acceptance, WMO would inform the branch through a fax which would contain the text of final-contract. Final Contract is prepared by the branch and customer signs the draft copies, which would then be dispatched to WMO. On receipt of the physical copies, back end rate adjustment would be performed in the back end WM mainframe systems and a fax would be sent to requesting branch, notifying the change. Branch would then inform the customer.

2.2. Request Frequency (Monthly) and Typical Resolutio n Timelines Processes P1 P2 P3 P4 P5 P6

Typical SLA (In Bus. days) 4 6 12 5 8 14

BAU ONT1 1852 1010 334 834 8231 4186

BAU ONT2 1960 1176 654 1037 8191 3457

BAU ONT3 2188 1497 394 946 7809 1700

BAU QUE 1 2964 1465 481 829 9670 3322

BAU QUE 2 2035 1345 607 864 10318 2413

BAU MAN 1 1537 1317 294 980 10176 4957

BAU MAN 2 2679 1131 373 993 11158 4153

BAU SAS 1 2929 1493 678 912 11353 2986

BAU SAS 2 2454 1293 680 844 8382 4718

BAU ALB 1 1754 1086 191 856 8908 2904

BAU ALB 2 1787 1421 120 891 6295 3308

BAU BCO 1 2336 1105 726 937 6084 4307

BAU BCO 2 2323 1257 608 1049 10657 1662

BAU YUK 1 1667 1280 152 1050 8907 4067

BAU NWT 1 1878 1262 722 1002 10116 3547

BAU NWT 2 2076 1288 490 1003 8687 3874

BAU NUN 1 1866 1128 707 1009 6182 2220

BAU NAL 1 1578 1120 124 902 8036 4213

BAU NOV 1 2336 1429 493 962 6068 3175

NAU NEW 1 1895 1159 201 963 11862 2919 Table 1 - Request Frequency

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2.3. Existing BAU Details Support Staff /Location /Req uest Influx

BAU Code Location & Servicing Branches

at Customer Support

Staff Monthly Request

influx BAU-0 Mississauga, Ontario 2000 202352 BAU ONT1 Ontario 132 16447 BAU ONT2 Ontario 132 16475 BAU ONT3 Ontario 116 14534 BAU QUE 1 Quebec 150 18731 BAU QUE 2 Quebec 141 17582 BAU MAN 1 Manitoba 154 19261 BAU MAN 2 Manitoba 164 20487 BAU SAS 1 Saskatchewan 163 20351 BAU SAS 2 Saskatchewan 147 18371 BAU ALB 1 Alberta 126 15699 BAU ALB 2 Alberta 111 13822 BAU BCO 1 British Columbia 124 15495 BAU BCO 2 British Columbia 140 17556 BAU YUK 1 Yukon 80 17123 BAU NWT 1 Northwest Territories 148 18527 BAU NWT 2 Northwest Territories 139 17418 BAU NUN 1 Nunavut 105 13112 BAU NAL 1 Newfoundland and Labrador 128 15973 BAU NOV 1 Nova Scotia 116 14463 NAU NEW 1 New Brunswick 152 18999 WMO Niagara Falls Office 600 68088 Table 2 - BAU Details

2.4. Voice of customer A preliminary survey of the customer base was undertaken, while these processes were studied. Customers voiced concerns about the efficiency of existing support processes and MBC banks capability to service these requests through their existing processes. Some excerpts from these interviews are as follows: 1. I just got married to my long time girl friend Judy and I have been trying to get her registered as a joint account holder to my MBC savings account. I had to fill lot of information in the paper form. Why do they need information such

as my SIN (social insurance number) in the form? Why cant they take this info from my record itself?... it has been 4

days but my request has not been resolved. We have to leave for our honey moon tomorrow. MBC is wrecking my

marriage plans -Michael Bone, stock analyst, Ontario (April 2010) 2. I just got divorced! My ex wife is a spend thrift! I have been trying to get her de-registered as a joint account holder

to my MBC savings account before she spends all my money on her shopping at Square One and Toronto! The teller at

the branch tells me that the request is pending at Blue Valley who would need to send the original Joint Account Holder

registration request form for this request to be processed. It has been a week now and the request has not been

resolved. MBC seems to be wrecking my finances, with active collusion with my ex wife !

-Michael Bone, stock analyst, Ontario (June 2010)


3. It is just like magic! One minute, the cash was there in the ATM machine slot, the next moment, as I reached out for the money, the money disappeared back into the machine!! I ran to the MBC bank branch, only to find out that my

weeks savings have been debited from my account! Would wonders never cease? As I tried logging the request, the

bank retailer asked for the transaction slip related to the transaction. I had to go back to the ATM to find out the

transaction slip. They say that they need the transaction slip to find out the exact transaction so that the amount can be

identified. Why cant they identify the transaction within their systems itself, if I tell them the time and amount of

transaction? I am so annoyed that I may just hex them! -Lord Vmort, Stage magician and illusionist, Saskatchewan (May 2010) 4. While shopping at the harbour front Toronto, I discovered to my horror that my ATM card was missing! I called MBC

support staff member who immediately blocked the card. I filled out the card issuance form for getting a new card and

they have said that I would be getting a new card next week. But I am at my wits end. I am missing out on my shopping

and I do not want to carry so much cash in my purse. I wish to know who is working for my request at this very

moment.

-Becky Brownwood, Socialite, Nova Scotia (March 2010) 5. I will sue MBC! I had applied for a notarized T56 form to claim GST tax credits from CTA. It turned out that one of

their BAU had a query about an entry in T56 form and they had faxed the branch about it, but the branch lost the fax and

forgot to inform me! So my request was stuck in a limbo! Are their no SLAs? Is there no accountability? Deadline for

CTA tax return filing is tomorrow! I will file for damages against MBC!

-Veer C, Genome Designer, Mississauga, Ontario (March 2010)

6. I am advising my customers to not use KBC as a home loan provider these days. In my experience, I have rarely

seen a bank which has such a bureaucratic process for handling mortgage plan switches. Today, when most banks are

moving to higher degree of efficiency, my customers are forced to visit the bank time and again, to either sign the

contract draft or to sign the final draft. I wonder if there is a formal process for their wealth management office to

intimate the approval or declination directly to the end customer, which would avoid delays.

- Keith Pereira, Real Estate Agent, Alberta (July 2010)


2.5. Voice of MBC employees A preliminary survey of the employee base was undertaken, while the processes were studied. Employees voiced concerns about the efficiency of existing sourcing models which at time inhibits them from performing their responsibilities effectively. Some excerpts from these interviews are as follows: 1. I service requests related to Joint Account Holder registration process and I have to spend significant time , searching for the correct joint account holder registration form. Customer complains about them entering a lot of

information on the forms. Sorting all signed forms at the end of the day for BAU pick up is a time consuming process as

well. - Joe Black, Teller, Queen Street Retail Branch, Mississauga (May 2010) 2. Every Joint Account Holder deregistration process request is a pain in itself. Since we have to retrieve the form from Blue Valley, there is a significant time lag, before the Blue Valley responds to a request. This has caused us to not

able to formulate any service SLAs. Replacing Blue Valley would be difficult as I dont see any other physical records

storage provider which can offer services at similar scale. - Jill White, BAU ONT1, Mississauga (July 2010) 3. When we bought the ATM machines from Anthrop Corporation (AC) five years ago, we were assured of excellent hardware and post sales maintenance support. The warranty period expired four years ago.Today, apart from regular

ATM machine related issues, raising a request on AC's servicing portal is a time consuming process. Portal is down for

maintenance 2 days a week and I can never track my requests on their Portal. To raise any request, AC insists on a

scanned copy of the ATM transaction slip. This wastes more time in scanning operations etc.

And since for each AC request, we have to pay AC CAD 4.00 as service charges, the servicing costs are very high, if we

add em up. Latest Chinese ATM machines seem cheaper but we can not be sure of their quality.. - Svetlana Okinova , BAU MAN 1, Manitoba (August 2010) 4. There is a joke in the industry that MBC sources everything externally other than its brand name! SMACARD is another such external vendor, adding credence to this joke. I found SMACARD Org (SO)s support portal to be good, as

it is rarely down, but it utilizes Canada post for its shipping operations, which is not very regular in remote provinces.

That delay infuriates our clientele. Why cant we handle the shipping operations ourselves? - Herman B, Customer Service Operator, Mississauga (May 2010) 5. March is a hellish season for me! This is the time, when customers prepare their tax returns and flood us with T56 notarization requests. My team of 10 notary officers are expected handle all T56 form processes which come at the rate

of 1000 every day. The validation process itself is very simple and does not take more than 10 seconds, but requires

sound knowledge of internal banking policies and Canadian Tax laws.. Due to this inhumane workload, my team

undergoes a massive attrition to the extent of 40% each year. Lots of specialist knowledge is lost and the learning

curve for the new employees is very high.

Being part of the central BAU,I have to undertake other operations as well. I do not know that to do! - Anup , Notary officer, Mississauga BAU , Mississauga (June 2010) 6. Canadain Realty market is a dynamic market and as WMO officer, my job is to ensure that we do not regress to a sub prime crisis. As a WM operative I need to evaluate the Home loan adjustment requests and to approve the request

based on the viability of the customer to pay back the loan in terms of the new mortgage plan. To assess the viability of

the customer, I need recent credit history and credit worthiness details, which Bank's systems do not provide. This is

the reason as to why we need to ask the Branch to get us additional details. - Ram , WMO, Niagara Falls (September 2010)

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3. Existing System Landscape high level

Servicing BAU

WMO

Email/Fax based Routing & Control

Branches

3.1. Existing BAU/WMO Request Management Process

Branches cite the request number (from home grown query recording tool) in their emails /faxes/mails to their BAU. On receipt of these requests, the existing BAU mail handler / support operator allocates the work to their support staff as per their internal work allocation procedures. Each BAU has its separate mechanism to allocate work. In almost all the processes, different stakeholders require to revert back to another stakeholder for additional information. Metrics assimilation is another function which is undertaken by their reporting team. Reporting has been a major pain area for years and requires manual verification for forms / branch. While basic guidelines for SLA management are in place, due to the operational inefficiency and lack of information, the SLAs are rarely met.


4. Conclusion

MBC has understood that in order to sustain its competitive positioning, a revamp of its existing customer support process and organizational sourcing operations was imperative. They wished to have standardizations in terms of sourcing processes, applications, processes, reporting and administration. The environmental lobby also stressed on the need to eliminate paper usage and adopt environmental friendly measures to work on these requests. To achieve this mammoth effort, MBA realizes that significant organizational resources would have to be committed for a structured roadmap implementation. There is a significant need to understand the gaps in the existing sourcing strategy and to institute a new sourcing strategy, serving all levels of the sourcing pyramid, namely Strategy Formulation, Optimizing Operations and Sustaining Operations. While some functions would have to be retained, some may have to be sourced differently along with new expertise and skills. With this goal, MBC has formed the project Orion which would aim to study the existing sourcing and business processes and recommend ways to optimize these processes. Project Orion would also involve implementation of a scalable solution which would help MBC, wade over these pain areas and also serve as a platform to host other service offerings in the future. Project Orion needs consultants to develop a roadmap and to provide other advisory services. MBC would also require to rationalize its sourcing ecology and system integrators to implement the defined roadmap. Being a long term engagement, Orion would also require different level of support services as well.

Documents

MBC Case Study Release 1.2