Financial & Operational efficiency through

electronic Banking and

Supply Chain Management

“Defining
Defining New Horizon”
Horizon

Sushant Bhasin
EVP & Country Head – Product Sales,
ASSOCHAM, New Delhi
Transaction Banking Group
YES Bank Ltd. November 25, 2009
"That's our accounts department
p
How we Pay today?

Population: 1 Billion +
Pay by
Cash
Cheque
Card
Electronic
Credit Notes
Kind
and TODAY is CHANGING
Present Composition

CORPORATE – 30%

GOVERNMENT – 70%
%

RETAIL/INDIVIDUAL Insignificant
RETAIL/INDIVIDUAL- I i ifi t
Fact Sheet

Constraints Impact
p

» Scale / Geography » Credit Delays

» Varying Automation » Uncertainty of

p y
payments

» Ltd Linkages » Reconciliation issues

» Paper Based Models » High fraud potential

» High Administrative
Burden
Key Business Challenges

Slow Cash compensations systems

Irregular financial structures with a mix of manual
processes and computerized clearing systems
Inability to determine schedule of inbound monies
Long and unpredictable clearing cycles for
receivables outside main cities
Paper-based
Paper based clearing, multiple clearing houses
Clearing & settlement risk
N S l
Net-Settlement-end
d off day
d settlement
l
Trends
Rapid improvements in the Clearing infrastructure –
Computerization of Banks
A move away ffrom paper b
based
d transactional
t ti l flows
fl
Convergence of Wholesale and Retail Payment Networks
Treasurers role
T l in
i the
th company’s
’ working
ki capital
it l
management.
Firms with decentralized treasury structures face a greater
challenge
Gradual transition to real-time access / data ‘on demand’
Common reporting problems (lack of integrated systems’,
neglect of A/R and A/P reporting, inconsistent reporting
by subsidiaries, lack of inter-company co-ordination….)
Sharing inventory data across the supply chain
RBI – Ushering the Change
VISION
“To Provide A Safe, Secure, Sound and Efficient payment
and settlement system for the country”
Increase Efficiency of the Payments systems
Customer Facilitation for each of the payment system
products

Key Initiatives
Introduced RTGS in 2004
Introduced NEFT for retail payments in 2007
Introduced Cheque Truncation in 2008
Introduced Speed Clearing in 2009

Focus of moving to efficient and secured payments landscape

Phased out HV Clearing in 7 major locations
Regularly increased customer timings for RTGS and NEFT

Payments
y Vision 2009 - 2015
NEFT 24 x 7
India Card – India based card system
New regulations in mobile payments
ePayments Landscape

RTGS NEFT NECS

Paperless/Inter-Intra Paperless/Inter-Intra Paperless/Inter-Intra

Bank, Inter/Intra city Bank, Inter/Intra city Bank, Inter/Intra city
Within 2 hours Settlement Time: T+0 Settlement Time: T+1
/ T+1
Real-time, Continuous Multi settlements/day Batch
B h – 6 batches
Batch b h
12000+ centres, 60000+ 12000+ centres, 60000+ 114 Banks, 28000
bank-branch locations bank-branch locations branches

Negative, Positive Only Negative Only Negative

Confirmation Confirmation Confirmation
Financial Supply Chain Solutions
Web Enablement Superior product 
Structuring

RTGS Transfers

Dedicated Service 
Demand Drafts Finished Goods Export Finance

Manager Letters of Credit Competitive 

FX  Remittances Rates

Sales
Integrated Financial supply 
chain management solution

Raw Materials
RTGS Collect
Import Financing
Local Cheque 
Enriched and  Faster Turnaround 
Collections
Customized MIS Time
Liquidity Services
Liquidity Services
Upcountry 
Collections

Investment 
M
Management

Cash & Bank

Strictly Confidential Balances Faster access to 
information Account Receivables
SME Challenges

Economic Downturn
Access to Cheap Funds
High Operational Cost
Tight
g Competition
p
Low Automation
Key Success Parameters
I
Innovation
ti
Speed of Execution
Need of the hour

One Bank solution for AP/AR

Ability to predict cash flows
Increase revenues by investing investments on higher
returns
Just in Time Payments – Reduction / elimination of idle
funds
Reduce operational
p costs by
y automating
g AP/AR
/ processes.
p
Case Study – Havells India Limited
YES BANK’s Role
YES Bank acting as the innovator in the E-
Payments space helped Havells in migrating
from their physical cheque writing process to
a completely automated electronic payment
mode.
Deal Description
•1000 + Vendors across the country
•Current Process – Manual cheque writing,
signing and delivery to vendors
•Issues with current process –
•Time taken for creditingg vendor – 5 days
y model.
minimum
•Manual Reconciliation
•Manual errors in writing cheques, signing,
signature mismatch issues, managing
logistics of cheques (100+ cheques per day)
Key Highlights
• Migrated Havells to electronic payments (RTGS and NEFT) for
making payments to 7000 locations across the country
• Complete system integration with SAP ERP for payment, advice and
reconciliation
ili ti file
fil uploads.
l d E Expertise
ti iin iintegrating
t ti ththe SAP
application can be successfully replicated across most SAP systems.
• Payments to 1000 + vendors across the country are credited on the
same day
• Email advice containing invoice level information sent to
beneficiaries along with the payment
• Single file upload irrespective of payment type – RTGS / NEFT
Benefits to Havells
• Optimized Treasury Management due to “Just-in-time” payment
• Zero float loss
• Cycle time reduced from 5 days to 1 day
• Cheque couriering costs saved
• Integration with ERP eliminated all manual reconciliation errors and
saved huge time
• Email advising to beneficiaries eliminate client servicing issues
• Reduced work load.
Process Flow @ Havells

YES Bank RBI Supplier’s Bank

Havells ERP

Activity Duration – Before E-Payments Duration – After E-Payments

Chq Preparation & Dist 2 days 0 (Integrated with ERP)

Chq
q Clearing
g 2 day
y 2 hours ((e-payment)
p y )

Reconciliation 1 day 0 (Integrated with ERP)

Supplier

Total Duration 6 days 2 hours

Testimonial….
One Bank Model
Payments
• State-of-the-art RTGS, NEFT platform to make payments across 58000+ bank branches.
• Standard ERP /Accounting System Connectivity for automated payments cycle
• Automated Email advices to beneficiary intimating of the payment done

Collections
• User initiated MIS available for fund flow predictability by region, branches.
• Customized MIS with the facility y to do auto reconciliation with Invoice matching
g

Salary Payments
y Single File Uploads for payments to any bank
y Secure uploads with coded employee data ensuring data privacy and accurate transfers

Enhanced Security
• Two Factor Authentication
• Data Encryption

Administrative Efficiency
y Online Beneficiary validation for assured and secure transfers
y Email and SMS advices to beneficiaries with Invoice level information
y 24 x 7 payments.
Unique Technology Proposition
New Entrant Advantage
„ No Legacy Systems
„ Latest technology
gy
Outsourcing Approach „ Customer Focus High Degree of Automation
„ Strategic tie up with Wipro „ Straight through processing
„ IT infrastructure and network (STP) enabling improved
Unique, process accuracy and
managementt outsourced
t d
Scalable
Variable cost model – scalable efficiency
„ Business Model
based on branch rollout „ First Mover – RTGS via
„ YBL retains IP and know-how Internet
Back office operations ISO
„
Software
certified
Hardware
„ Partnership arrangements with
„ Efficient procurement
vendors, lowering cost and
enablingg access to latest,, more „ Most of the IT infrastructure
efficient software remains off balance sheet
„ Agreement with I-flex for core „ Infrastructure ‘on demand’
banking solution, CashTech from IBM
for CMS and Murex for „ National Award for Data
treasury Centre

NASSCOM Award in April 2006 for ‘IT Innovations in Emerging India’

Value Pyramid

eFinancial Supply Chain

Integrated Financial
Supply Chain Solutions

Delivery
y Channels
Internet banking
Phone banking | Mobile banking

E h
Enhanced
d Ch
Channell Fi
Finance Solutions
S l ti
Vendor Financing Dealer Financing
Supplier’s receivable financing Bill Discounting / Invoice Financing
Order Management Services Increased sales and inventory reduction
Payment
y Reconciliation

Customised Cash Management Solutions

Receivable Management Solutions
Invoice Management and A/C receivable matching Payable Management Solutions
C ll ti
Collections th
throughh fund
f d transfers
t f RTGS & EFT enabled payment platforms
Local and Outstation collections at more than 900 locations Onsite and remote printing models
Cheque/ Documents Pick up and delivery Payable at Par issuance
Enriched MIS
Way forward

Eradicate inefficiencies in the financial supply chain.

Automated processes along the chain and integrating
disparate systems (e.g., accounting and cash management).
Adopt partnering approach | Third party tie-ups.
The gradual rise of e-payments
Cheque truncation and cheque image exchange spell the
end of float and therefore the end of one of the reasons
businesses use paper.
Enhanced e-payments from initiation to reconciliation.
The eventual automation of the financial supply chain
 THANK YOU

Contact details:
Sushant Bhasin
EVP & Country Head – Product Sales,
Transaction Banking Group
YES Bank Ltd.
Ltd
011--66569000
011
sushant.bhasin@yesbank.in