Improving Forward Contracts for a Bank

Background


A large private bank was experiencing many issues in the Foreign Exchange Business. Identified improvement areas included: Reduction in process hand-offs, Creation of a robust process and Reduction in Operational, Financial, Market and Regulatory Risks. The market for foreign exchange being very competitive, the bank had a need to critically review its current process in order to scale the business in a way that minimized errors and resultant risks. The bank engaged Parikar to re-engineer the process.



Methodology and Analysis :


Parikar's team comprising of a dedicated engagement manager and two analysts planned and undertook a complete end-to-end process mapping exercise in order to identify opportunities for radical improvement.


The project team identified many potential improvements related to the process for Foreign Exchange Transactions, the specific manner in which documentation was being collected before a deal was finalized and the need for customers to undergo a series of duplicative process steps. Improvement opportunities identified were implemented through a combination of process workflow changes, risk identification and remediation actions. Operational, process and technological changes were recommended with an action plan. Parikar's team helped stakeholders within the bank to implement changes and to introduce a feedback mechanism for continued control over the process.




Results


The outcome of this engagement was wide ranging improvement across the bank's Foreign Exchange Business. The overall process was streamlined with a clear assignment of roles and responsibilities. Measurement criteria were put in place with the help of the bank's team. Some noteworthy improvements due to this engagement are:


  • Process changes that eliminate errors related to required regulatory documentation have been instituted
  • Monitoring and Control of Limits resulted in reduction of Credit and Market Risk
  • A robust process to eliminate any possibility of errors for Past Performance Transactions is in place
  • A new system is in place for streamlining and consolidating all variants of Foreign Exchange Transactions
  • Time taken to close deals for retail foreign exchange deals has been reduced from 7-8 working days to a few hours
  • Immediate notification to customers on deals completed has been introduced, increasing transparency for customers and increasing Information "Reach" to stakeholders in the Bank
  • Business has scaled 2 to 3 fold owing to re-engineering of the process

An important outcome of this engagement has been creation of a formal measurement system and a management review process based on metrics. A process for analysis of defects and customer complaints and acting upon these systematically is another significant contribution from this engagement.