Techcombank: - Temenos

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Temenos Case Study On a more basic level, having a single view of the customer should result in better (and more efficient) handling of all customer queries and greater cross-selling potential – since the bank employee is aware of all products the customer holds and the customer’s full history of correspondence, etc - and Techcombank has invested heavily in staff training to ensure that this is the case. So, for example, there is an increasingly blurred line between teller and account manager: branches are set out in such a way that allows for more comfortable interaction with the bank’s employees who are knowledgeable about the products available and so can perform both sales and service. Similarly, when a customer calls the bank’s 24-hour call centre, the staff have been trained to be able to deal with most queries, including the completion of complicated documentation, like certificates of origin for export. “Independent market research confirms that Techcombank consistently scores higher than its rivals in customer service” More personalised and efficient customer service has also resulted in growth in profitability per customer. In 2007 and 2008, Techcombank increased absolute customer numbers by 94% and 83%, respectively, but increased pre-tax profitability faster - by 148% and 125% in 2007 and 2008, respectively. This means that profitability per customer has grown on average more than 25% in the last two years. Data from customer satisfaction surveys held between Q3 08 and Q1 2009 9 70 60 50 40 30 20 10 0 Q3 2008 Q4 2008 Q1 2009 Source: Cimigo, independent market researchers ACB SCB EAB TCB The innovative, personalised and efficient customer service offered by Techcombank has clearly translated into high customer satisfaction levels. In addition to the awards that Techcombank has won for its customer service – such as “the Most Satisfied Services in 2008” voted by readers of Sai Gon Tiep Thi Magazine – independent market surveys confirm that Techcombank scores consistently higher than its main rivals, Joint Stock Banks like Asia Commercial Bank (ACB) and East Asia Commercial Bank (EAB). 25% average growth in revenue/customer in the last two years
Temenos Case Study Operational efficiency Perpetual improvement in efficiency and productivity Techcombank runs a continuous improvement programme aimed at raising the level of process automation within the bank’s operations centre by building interfaces between T24 and ancillary applications to allow immediate and automatic data transfer or by removing manual intervention in process workflows. In 2008, the Operations Center undertook 75 initiatives to improve efficiency and productivity, which resulted in a 3% reduction in staffing levels. In the first half of 2009, the Operations Center completed 21 initiatives leading to a 60% reduction in error rates compared with 2008. Even though Techcombank has made very significant improvements in profitability by customer, the improvement in profitability by employee is even more impressive. In 2007, profitability per employee increased by 34% (compared to a 28% increase in profitability per customer), while in 2008, profitability by employee grew by 64%, compared to a 23% increase in profitability per customer. 2008 Cost/income ratio: Techcombank vs Selected International Retail Banks 140 120 100 10 80 60 40 20 0 TCB Raffeissen BP Erste BCP Natixis Postbank 84% lower Techom’s IT cost/income compared to industry average 64% the increase in profitability per employee in 2008 2008 cost/income: Techcombank compared to Vietnamese peers 80 70 60 50 40 30 20 10 0 HB TCB ACB EXIM SCB Average STB Vietin VBARD VIB An Binh Source: Company annual reports, Reuters, The Banker Database, broker notes Source: Company annual reports, Reuters, The Banker Database, broker notes “Having a centralised and modern IT infrastructure allows us to gain significant economies of scale as we grow” Le Xuan Vu, CIO, Techcombank “At Techcombank, we are committed to a culture of perpetual improvement in efficiency and productivity” Trung Van Nguyen, Director of Operations Centre, Techcombank Economies of scale Over recent years, Techcombank has been able to extract significant IT synergies by leveraging its modern, integrated core banking infrastructure. Despite the significant and sustained investment that Techcombank has made in its IT systems (see earlier section) and despite its clear technology leadership in the Vietnamese market, the fact is that investment in IT, as a percentage of both revenues and costs, has been falling. As already explained, Techombank has built up the expertise on T24 to be able to launch new products in a day, configure the IT systems for a new branch in an hour and upgrade themselves to the latest release of the software (without external help) in two months. In this context, it has not been necessary to increase IT headcount as the same rate as, for example, customer-facing branch staff and, accordingly, the ratio of IT staff/all staff has fallen from 5% in 2006 to 3% in 2008. Similarly, various other measures of IT efficiency have also improved considerably over the last few years. For example, IT cost to income – which is a fairer measure of efficiency than IT staff/ all staff in that it also captures spend on local contractors who maintain hardware at branches more than 100km from Hanoi - has fallen to 1.5%. This is 84% lower than the European industry average of 9.5% 5 . 5 See Boston Consulting Group’s Third Annual IT Cost Benchmarking Study from May 2006
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Techcombank: - Temenos

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