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BANKING INDUSTRY
Presented by:Anggi Ratna
Profile
Company Position Period
Standard Chartered Bank Consumer Business Analytics Sep’11 – present
Bank Internasional Indonesia Risk Management,Personal Loan & Merchant Risk Policy Manager
Nov’09 – Aug’11
Citibank, NA Risk Management,Personal Loan Acquisition Policy Analyst
Oct’08 – Nov’09
Citibank, NA Risk Management,Branch Product / Banking Policy Analyst
Dec’07 – Oct’08
Citibank, NA Personal Loan Business,Marketing Acquisition Analyst
Feb’06 – Dec’07
Citibank, NA Personal Loan Business,MIS for Sales Operation & Support
Jul’05 – Feb’06
Anggi Ratna Utami, S.Si
Graduated on July 2005 from Mathematics ITB, majoring on Mathematics Finance.
Overview
Basic Principle of Banking
Risk Taking Unit
Actually Managing the Risk
Risk Management Unit
Assessing Risk:Measuring & monitoring whether risk occurred
InternalAudit
Providing assurance that Risk Management Framework is effective
Three Lines of Defence (TLD)
1st Line of Defence 2nd Line of Defence 3rd Line of Defence
> 400
Segmentation of Banking Customers
Lower Mass
Non-Bank-able
MicroBusiness
Credit Class
ProfessionalSmall
Business
SME,Commercial,
CorporateAffluent
Self Employed Employee
Turnover of IDR 10-350mio; Micro Enterprises; Mainly stall
owners & petty traders
Turnover of IDR 350-1,000mio; Small family-owned business;
Mainly in retail & trading; Typically with <20 employees
Non-Bank-able
Mass
Mass -Affluent
Affluent
Low-middle working class (white-collar
workers)
Government Servant;
Blue-collar workers
Source: Asian Demographics; Bank Indonesia; BPS
Loan size IDR millions
200
50
5
1
Household incomeIDR millions
150 - 400
25 - 150
5 - 25
Function Units on Banking
Consumer Bank
Corporate Bank
Legal
Finance
Corporate Affair
Human Resources
Audit
Compliance
Risk Management
Treasury
Special Asset Management
Technology
Operation
Consumer Bank
Lending
Transaction Banking
Wealth Management
Consumer Finance
Corporate Bank
Global Corporates
Financial Institutions
Local Corporates
SEGMENTPRODUCT
Transaction Banking Trade, Cash Management, Securities Services
Financial Markets Derivatives, Foreign Exchange, Rates, Structured Trading and Products, Capital Markets, Loans Syndications, Asset-backed Securitisations
Corporate Finance Corporate Advisory, Project and Export Finance, Structured Trade and Structured Finance
Principal FinanceReal Estate, Corporate PE, Alternative Investment, Group and Infrastructure
Risk Management
Risk Management Process
Identification
Measurement
Mitigation
Monitoring
Type of Risk
Risk that the debtor fails to repay its loan1
2
3
4
5
6
7
8
Risk that the movement of interest rates will cause an unfavorable impact to the banks trading book and banking book
Risk that the bank suffers when it has not enough fund to pay its obligation at any given time
Risk caused by failure of system, people, and external event
Unfavorable effect of negative publication
Risk of the bank being non comply with its regulator
Risk of the bank sustaining losses from lawsuit
Risk of the bank wrongly applying its strategy, which is resulted in worse performance in the market compared to its competitor
Credit RiskCredit Risk
Market Risk
Liquidity Risk
Operational Risk
Reputational Risk
Compliance Risk
Legal Risk
Strategic Risk
Control the risk
Credit RiskCredit Risk
Market Risk
Liquidity Risk
Operational Risk
Reputational Risk
Compliance Risk
Legal Risk
Strategic Risk
Apply standard for collateral, set-up minimum risk level via our credit risk rating
Perform hedging via forward contracts, options, and/or other derivatives.
Apply SOP (Standard Operating Procedure), technology updates, stress test of equipment and personnel
Actively educate our customers regarding our products to avoid misunderstanding that will lead to customer complaint
Perform compliance review of our alignment with regulatory requirement
Countermeasures in the form legal actions
Proper market study
Consumer Bank
Consumer Bank
Lending
Transaction Banking
Wealth Management
Consumer Finance
Key Driver for Consumer Banking Financial Performance
Trading profit
Working profit
Loan impairment
IIP
PIP (provision)
Revenue
Cost
Volume
NIM
NFI
NII
GIM
COF
GCO
Net recoveries
-
-
+x -
+-
Indirect
Direct+
People
Premises
Tech and ops
Others
+
GIM = Gross Interest Margin
COF = Cost Of Fund
NIM = Net Interest Margin
NFI = Net Fee Income
NII = Net Interest Income
GCO = Gross Charge Off penghapusan kredit macet
IIP = Individual Impairment Provision GCO - Recovery
PIP = Portfolio Impairment Provision pencadangan macet
LI = Loan Impairment IIP + PIP Total Bad Debt
31
100
75
42
35
17 7
33
13 2
0
20
40
60
80
100
GII COF NFI ContraRevenue
TotalRevenue
Total Cost WorkingProfit
GCO Recovery TP
Key Driver for Consumer Banking Financial Performance
Banking Customer Proposition
Acquisition Retention Cross sell
Product
Pricing
Promotions/Communicatio
n
Distribution
People
Processes
• Do products have the right value proposition for customers • Does it fulfill customers’ need
• Is pricing less than the perceived benefits from the customer’s perspective• Is pricing structure favorable to the customer
• Is promotion compelling for customers • the right communication to reach out customers
• Reach versus accessibility• Are we convenient for the customers to use
• Do banking people understand the product sufficiently to communicate its value to customers
• Are banking people competent to provide value added advise• Are processes efficient to deliver this value proposition at the lowest possible
price• Are processes onerous on our customers
Risk• Have we priced sufficiently for risk- risk based pricing• How do we ensure we have the right risk infrastructure to manage our clients
Tips to Fresh Graduate to Enter Banking Business
• Passion and Committed• Build Good Relationship / Networking• Integrity and Respect• Dedicated to Team Work• Be Open Mind• Exceed other expectation ( Excel)• Job is different with career• Sell yourself• Improve English capability (both verbal and written) and
knowledge of computer applications• Know the Company and business• Attitude is the most important
THANK YOU