4-page Case Study - Posted 4/12/2006

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Asia Credit Limited Bank

Financial Services Company Transforms Into a Bank Using Channel Renewal Framework

Asia Credit Limited (ACL) Bank, the fourth largest finance company in Thailand, is transforming itself from a finance company to a full commercial bank. The company’s management has a clear vision of its future role in the marketplace, but needed a way to define a rapid path to realizing its goals. One element was bringing in Technology Connexion, a partner with deep banking experience, to help design the new business processes and human resource systems and define the IT requirements. Another element was using the Microsoft® Channel Renewal Framework, which enables the development of reusable business services across more than one channel (branches, customer care center, Internet) in order to provide a consistent customer experience and take advantage of integrated channel renewal initiatives. Microsoft technology provides a cost effective and scalable environment through which ACL Bank provides new banking services to a growing customer base.

Situation

ACL Credit Public Company Limited (ACL on the Bangkok Stock Exchange) is Thailand’s fourth largest finance company by assets and equity. It is an affiliate of the country’s largest bank, Bangkok Bank PCL. Asia Credit Limited (ACL) Bank offers loans and savings accounts like other financial institutions with one subsidiary doing business in securities. Its principal operations are lending to corporations and small to medium enterprises of various kinds.

K Sumana Pornnutvutikul, Executive Vice President, Recovery Division, ACL Bank says: “ACL is transforming itself from a public company into a bank. ACL would like to become a technology leader in the banking industry. To accomplish this goal we need experts in various fields.”

Challenges and Goals
In the banking business, services, and products tend to be very similar commodities.  ACL Bank wanted technology that would provide a more interesting product, and one that is different from that of other banks. They wanted innovative technology for better client service.

K Sumana says: “ACL Bank is new and not yet big. Our goal is to be a ‘small but cool’ bank by providing services that the other big banks cannot provide.”

Microsoft helps ACL Bank design technology that is new to Thailand… and gives our bank the cutting edge. K Ratchanee Mesommonta, Assistant CEO and Executive Vice President, Technology Division, ACL Bank

ACL Bank first started as Asia Credit Public Company Limited with products such as loans and certificates of deposit. With government approval to transform itself into a bank, the company can offer a much wider range of services, including trade finance, fixed accounts, savings accounts, and checking accounts. While these services are also offered by other banks, ACL Bank expects to set itself apart with superior technology.

The company’s management has a clear vision. The challenge lies in creating a design and implementing the support systems that will fulfill that vision.

K Thongchai Ananthothai, President, ACL Bank, explains, “Technology can be divided into two major views: the customer’s point of view and the internal point of view. When talking about internal technology, people tend to think about the operation system and system efficiency. With a good system, there is less chance for error and some laborious steps are removed because technology can perform that function. Employees will have more complete information for greater flexibility. In addition, they have greater access to the company’s objectives. Evaluation and reinforcement is managed better when there is more access to detail.

“When talking about technology externally, people generally think of the operating system, encompassing the system’s efficiency, cost reduction, error reduction, and step reduction. If an employee has accurate information, there can be more flexibility when providing client services.”

Solution

The steps ACL Bank followed were to create an overall business model and design and then to implement the technical architecture to support that design.

“From services to human resources, we want to become a leader in technology in this business,” says K Ratchanee Mesommonta, Assistant Chief Executive Officer and Executive Vice President, Technology Division of ACL Bank.  “Currently, our most important task is choosing the core system, as well as coordinating support systems to be used when our bank opens on October 1, 2005.”

Everything obviously does need to scale from 1 to 10 to 100. We want to introduce new capability and scale that…. ACL is going to be 10 times bigger in 4 years time than it is today.” David Brearley, Managing Director, Technology Connexion

Besides petitioning for a license, to become a bank ACL Bank had to go through an extensive process of forecasting—not only in technology and human resources, but also in logistics and architecting a business model.

K Tarissa Tanjasiri, Senior Executive Vice President, ACL Bank notes: “At ACL Bank, we do have some advantages: no old legacy systems, no large numbers of staff to re-educate, and few branches. We are at the beginning, starting from zero, like a plain white paper that allows you to do anything. You can plan it any way you like. Microsoft is helping us with the design process, systems control, and with the image of the company as a modern commercial technology-driven bank.

“Microsoft understands where we would like to go and what markets we are targeting. They helped us plan how our branches should look, where they would tentatively be located, what technology we should start with, and what type of staff we should have.”

K Ratchanee recalls, “Microsoft joined us early on and helped us analyze platform and core banking alternatives. Microsoft helped us even though there was no discussion or agreement concerning benefit to Microsoft made at that point. They also oversaw the architecture of our branches, to ensure the best image and attractiveness.”

ACL Bank is planning more new brick-and-mortar branches over the next three years.  

Channel Renewal

Microsoft brought in Technology Connexion, a partner with extensive banking experience to assist with the business model.  K Ratchanee continues: “We asked Microsoft and Technology Connexion to help us define the details for a successful transition. Microsoft enables the most up-to-date technology new to Thailand. Technology Connexion uses its experience with other banks to help us combine technologies into a system—from work flow and analyzing business models to the selection of software, the core banking system, and choosing the type of platform to best coordinate with our core banking system.”

K Thongchai comments: “With the aid of Microsoft and Technology Connexion, ACL Bank embraces a clear vision as a financial institution—trustworthiness and innovation.

“We have been working with Microsoft and Technology Connexion to study the process of Channel Renewal. One concept leads to another in this process and, as we develop the plan, they bring in invaluable technology for the competitive market of the future.”

K Tarissa adds, “We get along very well in our planning process with our partners—Microsoft and Technology Connexion. Microsoft has great expertise in software and in branch banking. Technology Connexion is experienced in a core banking system that can help us differentiate ourselves from our competitors.”

Technology Connexion is headquartered in Singapore and serves all of Asia. David Brearley, Managing Director, Technology Connexion, says, “ACL Bank’s CEO has a very strong vision about what he wants to achieve and the pace at which he wants to achieve it. He has definitely recognized that technology is a key part of what he wants to achieve, indeed he describes it as a technology-led bank. For us, there was the attraction of a customer who wanted to do something different, a customer who wanted to use technology aggressively, and a bank that wants to make a mark on the stage here.”

Microsoft Customer Care Framework (CCF)

ACL Bank had previously engaged an international consulting firm to define a business strategy, but it had a gap between strategy and execution. Technology Connexion’s role, introduced by Microsoft, was to help the bank realize a feasible execution plan by its deadline.

Brearley comments: “And that’s our job there, to develop the business case for investment, to define the business processes, and estimate the cost of implementation and therefore determine the ROI [return on investment].

“There are all sorts of challenges in terms of how to get the company from where it is today to where it wants to be—challenges with people, technology, process. These things have to come together quite quickly.

“ACL Bank’s current small size presents additional challenges,” Brearley adds. “Most solutions available for the banking industry work best for large banks. The threshold cost for adopting technology for a large bank means buying big applications and big hardware, which is costly. Plus, ACL is a finance company and turning itself into a bank; just changing from one type of business to another presents big challenges.
“ACL’s advantage in using the Microsoft platform is that it can keep the cost of ownership in proportion to its size, and grow the capability as it itself grows. The up-front investment cost can be grown commensurate with the growth of the bank as the business gains customers and traction.”

By transforming into a wholesale bank, ACL Bank has taken a strategic step.  Brearley continues: “Everything obviously does need to scale from 1 to 10 to 100. We want to introduce new capability and scale that. In pure sizing terms, ACL is going to be 10 times bigger in 4 years time than it is today. Microsoft always has a good product. For the Financial Services Industry, the products are now much more reliable—more secure and therefore much more saleable—than they were five years ago.”

Microsoft Customer Care Framework (CCF) is part of the Channel Renewal solution stack in improving efficiency, increasing cross sell/up sell capabilities via an integrated, unified agent desktop. Key products and technologies include the Microsoft Windows Server™ 2003 operating system with Microsoft SQL Server™ 2005 as the database, Microsoft BizTalk® Server 2006 as the data integrator, and Microsoft Host Integration Server 2004 as the access method to mainframe data. Windows Server 2003, SQL Server 2005, BizTalk Server 2006, and Host Integration Server are all part of Microsoft Windows Server System™ integrated server software.

“Multi-Channel Integration (MCI)—Internet, phone, walk-in—showcases the bank as technology driven,” says Soo Ching. “If a customer calls someone in the bank and that person is not the relationship banker or personal banker for that customer, then the operations person dealing with that customer can bring the relationship manager into the conversation by video teleconferencing. All sides can see the account or statement or information plus the particular customer, much like a video conference.”

Soo Ching points out: “That is something very new in the Asia Pacific area. While some banks are already doing that in Australia, this breaks new ground in Thailand.”

Benefits

As a new and small bank, ACL Bank does have a disadvantage compared to large banks—fewer channels of distribution. Currently many brick and mortar branches would cost too much.  K Sumana points out, “We must think of innovative ways to present our products and services to clients.”

Multi-Channel Integration

K Sumana continues: “As a result, we have come to Channel Renewal. Microsoft gave us the idea about Channel Renewal, meaning a whole set of new features, including MCI and the idea of a virtual branch not a physical one.  Clients can get service by Internet and telephone, plus the CRM [Customer Relationship Management] system will deliver more knowledgeable service because the bank will know more about customer preferences.”

“Our RM [Relationship Manager] can go out to see a client by connecting to our system at headquarters; it will be as if the branch was in the client’s office. By this method, we can provide service anywhere.”

Better Service

K Tarissa summarizes, “Our bank is targeting small and medium businesses. We think proprietors of these businesses are a technology savvy younger generation. With our transformed project, we hope to tap this market niche. Our success depends on how we differentiate ourselves by technology that provides quicker and better service than our competitors. Our bank would like to be a small but modern bank excelling in service so clients choose us as their preferred bank.”

K Ratchanee adds: “In the banking business, the most important thing is quick service at a reasonable price. We look for partners to bring in technology to aid us in this goal. Our biggest concern—besides what we are doing for the back office by way of technology, staff, and setting up a data center—is the front office, which has direct contact with clients. Sales and Marketing needs tools to service clients promptly; this in turn reinforces the client’s own ability to compete in the market.”

“Microsoft helps ACL Bank design technology that is new to Thailand. While other companies may have the same idea as ACL Bank, much depends on how fast we finish the job and offer it to the public. This technology is not new abroad, but it is definitely new in Thailand and gives our bank the cutting edge.”

K Thongchai concludes: “The right technology should allow the client to experience faster, better, and more flexible services.”

Microsoft Channel Renewal Framework
The Channel Renewal Framework is one of the Microsoft Industry Priority Solution Scenarios (IPSS), which enables the development of reusable business services across more than one channel (branches, call centers, Internet, ATMs/POS) in order to provide a consistent customer experience and take advantage of single-channel renewal initiatives. It delivers cross-channel consistency, a superior customer experience, operational efficiency, risk mitigation, an integrated sales and service environment, and new business models in the branches—both virtual and brick and mortar— from service to sales.

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:
www.microsoft.com

For more information about Technology Connexion products and services, send e-mail to:
sooching@tconx.com

For more information about ACL Bank products and services, visit the Web site at:
www.aclbank.com/th

© 2006 Microsoft Corporation. All rights reserved.

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

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