Component business models - IBM

Allied Irish Bank
Allied Irish Bank is the largest retail and commercial bank
in Ireland and one of the largest in Europe, with significant
operations in Northern Ireland, the United Kingdom and Poland.
Business was booming for Ireland’s largest commercial bank
because of the country’s robust economy, dubbed the Celtic
Tiger. AIB wanted to manage the pace of growth and maintain
its leadership position.
AIB searched for a group strategy that addressed the
complexity of all of the different lines of business, rather than
simply implementing single solutions at the divisional level. It
understood that business and information technology solutions
needed to be linked through a unified, efficient operating model.
AIB partnered with IBM to use CBM to isolate and identify
the many functions of the bank and break them into distinct
business components.
CBM provided AIB with a granular view of the organization,
and the framework of autonomous components appealed to a
company that wanted to transform itself radically, but remain in
control. CBM also fit with the strategic vision of transforming
the Bank from a federation of operating divisions to a single
Group structure with common processes and a greater use of
shared services. In particular, CBM supported analysis of two
key drivers in the banking business – efficiency and responsiveness.
AIB and IBM used CBM to analyze related metrics
against peer performance, and located opportunities to unlock
hundreds of millions of Euros in additional value that were
sitting within AIB’s enterprise.
Going forward, AIB will continue to use CBM to shift its cost
structure, which is primarily fixed. By formalizing the business
components and the operating model, pieces of the business
can move to a variable cost structure and provide greater
control and predictability of margins.
SEB Group
The SEB Group is a North European financial banking group
for companies, institutions and private individuals, with 670
branch offices in Sweden, Germany and the Baltic States. SEB
has more than 4 million customers, of whom 1.6 million are
e-banking customers.
The firm had dual challenges of improving bottom-line profitability
while simultaneously growing top-line revenues. SEB is
pursuing a growth strategy, expanding primarily by acquiring
financial institutions in different markets. It was experiencing a
lack of profitability in its German branch, and needed to address
cost and efficiency issues.
Component business models
SEB needed a roadmap for the future, and the CBM
methodology supported an analysis of the as-is situation
while allowing for the development of a target business
operating model. The end result was a consistent operating
model with shared services and processes across countries,
as well as consistency and standardization in applications
and product offerings across all of SEB’s retail banking units.
In particular, the new model supports greater responsiveness
at both the product and corporate level. SEB
expects to radically reduce time-to-market for development
of new banking products by 50 to 70 percent. Consistent
product offerings across its retail banking units allow SEB
to quickly develop or customize products for particular
markets. The consolidation and centralization created
through CBM will also allow SEB to more easily integrate
newly acquired banks in the future.
KB
Today, KB (formally Kookmin Bank) has the largest number
of customers of any South Korean bank. The company
– which specializes in mortgage lending, consumer banking,
credit card and asset management – was selected Best Bank
in Korea for five consecutive years by Euromoney and Best
Bank in 2003 by Asiamoney.
After the meltdown of the Asia Pacific economies in the late
1990s, the South Korean government initiated extensive
consolidation in the banking industry. By 2002, consolidation
reached its final phase and big banks like KB could no longer
rely solely on size to compete. KB knew it had to differentiate
to strengthen its existing relationships with customers and
build market share.
There was one main obstacle in KB’s path: its siloed organization.
The inability of different divisions to communicate
and share information was preventing KB from getting a
single, consistent view of its customers. Moreover, it was
difficult to control costs and optimize operations.
To develop a comprehensive new enterprise model, KB
leveraged IBM and its CBM methodology to identify a series
of essential building blocks to be used and reused across the
bank. Based on this analysis, KB has embarked on several
initiatives to implement the operational model.
The bank expects to realize significant cost savings as it
evolves through a series of planned initiatives, such as a call
center transformation. Overall, KB expects the CBM project
will reduce organizational complexity and enable the firm to
become more responsive and customer-focused.
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