Technology Innovation For Banks In The "New Hard Times"

How I.T. Can Make A Difference In The “New Hard Times” BankIT Conference (Dubai), 26th November, 2008 Kalpesh Desai CEO, Agile Financial Technologies kalpesh.desai@agile-ft.com | www.agile-ft.com

Agenda R.I.P. Good Times Impact of the “new hard times” Shift in I.T.‟s strategic context Metamorphosis of an I.T. Company – Everything As A Service About Agile Financial Technologies Confidential Page  2

The New Hard Times Financial Markets Institutions Inter-bank Lending Mortgage Backed Securitization F.I.s restrict Rates Increase Securities/ lending Credit Markets Collaterized Debt Fall Credit Derivatives/ Investors exit Obligations Credit Default Swaps Stock Markets Capital Markets Fall/M2M Losses Sold Downstream To Institutional Investors Corporates Face Liquidity Crunch R.I.P. Good Times Financial Sub-Prime Institutions Loans Faulty Lending Collapse Lenders Stricter regulation/ Practices Tighter Credit Collapse Liquidity Increase in Infusion Low Interest defaults/ NPAs Decline in Bailout Plans/ Rates Property Prices Federal Conservatorship Banks Economy Governments Confidential Page  4

The domino effect Huge foreign surplus funds US private and government deficits. Much of it ($1+ trillion) channeled into subprime Confidential Page  5

The crisis comes closer to shore Mark to Exposure to market structured losses and investments Investor fears of have their confidence Capital downturn Local toll on falls to an all leaves the create a risk institutions investors time low emerging averse feel the who had markets / banking liquidity leveraged Real estate Stock system crunch panic, markets fall consumer panic and slow-down Confidential Page  6

Those who fail to learn from past failures are bound to replicate it Confidential Page  7

The New Hard Times  Recession is here and it’s a “U” Shaped recovery  Cash is KING!! - Liabilities typically have shorter maturity period than assets - Liquidity management paramount - Belts are going to get tightened  Customers demand greater transparency - Less forgiving; Fragile loyalty - Information availability and transparency  Enhanced regulation and governance Confidential Page  8

The System Under Pressure Increased Regulation & Oversight Clients • Demand new products & services • Client Acquisition & “In”Side Retention • Deteriorating • Risk-averse/ Asset Quality unforgiving • Liquidity Crunch • Dated, disparate, inflexible systems • Infrastructure Environment • Margin & Cost • Liquidity crunch pressures • Regulatory & compliance uncertainties • Slowing economy • Industry consolidation & convergence Confidential Page  9

Where will your priorities lie? Growth •Client relationships •New product launches Survival •Grow market share • Comply with new regulations •Improve operational efficiency • Improve risk profile •Achieve customer profitability • Reputation management •Achieve margins • Reduce losses •Achieve investor expectations • Protect customers„ assets Confidential Page  11

Can we strike a balance? Survival Growth • Comply with new regulations •Client relationships • Improve risk profile •New product launches • Reputation management •Grow market share • Reduce losses •Improve operational efficiency • Protect customers„ assets •Achieve customer profitability •Achieve margins •Achieve investor expectations Confidential Page  12

The barrier • Inflexible Applications • Islands of information • Tedious Product Development • Multiple interface points • Succession planning imperatives • Lack of research • Manage new regulatory & compliance norms • Manage business essential activities • Increase competitiveness I.T. Business Confidential Page  13

Agenda R.I.P. Good Times Impact of the “new hard times” Shift in strategic context for I.T. Metamorphosis of an I.T. Company – Everything As A Service About Agile Financial Technologies Confidential Page  14

Shift In Strategic Context For Information Technology Survival Growth ALM + Risk & Liquidity Business Compliance Management Intelligence Systems V@R with Borrowings Outsource? Scenario Management Low Cost of Analysis Ownership Operational Credit Risk Transaction Risk Management Processing Research Management Enable an AGILE business Confidential Page  15

BUSINESS AGILITY The ability of a business to adapt rapidly and cost efficiently in response to changes in the business environment. Confidential Page  16

Actions from lessons learnt Implement sophisticated liquidity management systems to ensure Improve Review non-core identification and communication & processes and identify measurement of the full workflow non-core areas that range of liquidity risks, infrastructure to can be outsourced, including contingent / off- ensure management freeing up internal balance sheet liquidity risks of risk resources Liquidity Risk & Infra Systems Processes Prediction Compliance Stress testing; Review internal and deployment of external facing compliance and risk systems and management systems – interfaces. Deploy market/credit/operations/ business continuity disclosure & market and disaster recovery discipline plans. . Confidential Page  17

Drivers for outsourcing • Commercial lending operations impacted • Financial belts need tightening Economic • Internal cost, especially IT costs, need to be managed Slowdown • Economies of scale enable reduce processing cost • Lower operational costs without compromising on infrastructure, processes and risk management Competitive • Research and new product development key to customer retention Positioning • Accelerated delivery and turn around times • Frequent changes in regulation is the vendor’s responsibility • Competency build up is the vendor’s responsibility • Operational management and back-office personnel are managed by the vendor Resources • Capacity overflow support in the event of excess transaction volume Confidential Page  18

Customer Facing What can be outsourced? Call Loan Processing Centre Claims Policy/Account Processing Servicing Fulfillment CPA/Verification/ Loan Servicing Check Imaging & Processing Back Office Payment Processing Research High Low Risk Confidential Page  19

Right-shoring your operations Joint Off-shore Venture Offshore Customer- Shared Services Facing BPO Near Shore Near Shore Offshore BPO BPO Captive Offshore Center Domestic IT Ops On-shore Domestic BPO Low High Risk Confidential Page  20

Define Goals Prepare the organization Define projects; align to for the changes being goal. introduced Build and/or deploy Deliver service levels at flexible and scalable optimum cost processes, systems and infrastructure Confidential Page  21

Select A Responsible Partner Business Changing accountability Process Outsourcing Value Chain Task Quality Simple rules Complex rules Judgement Standards Centers of Excellence Source: NASSCOM-Everest India BPO Study (2008) Confidential Page  22

What You Should Look For In Your Outsourcing Partner? Industry Expertise Proven Processes & Methodologies Innovation Infrastructure & Execution Skills Financial Stability Confidential Page  23

Create A Rigorous Review Mechanism Budget, Risk & Audit Business Transformation & Engineering Infrastructure & Capacity Review Benchmark , TAT & SLA’s Volume & Quality Analytics Outsource Programme Mgmt Confidential Page  24

Align Internal Processes; Decide What To Outsource IT infrastructure: Outsource to IT Vendors with proven capabilities in ITIL/ITES processes IT Infrastructure Application support and Application development: enhancements: Shortlist vendors who have Leverage vendor‟s core proven capabilities and strengths to ensure availability domain skills to develop of bench and support. applications. Application Application Development Support Confidential Page  25

Caveat Emptor  Strategic - Ensure activities of the vendor are consistent with the overall goals of the REGULATED entity  Reputation - It’s all about people! - Poor service levels can impact customer interaction - Reputation of the regulated entity is at risk  Compliance - Privacy, consumer and prudential laws have to be adhered to by your outsourcer - Ensure that your vendor has adequate systems, processes and controls Confidential Page  26

Caveat Emptor  Operational Risk - Verify the financial capability and disaster recovery capabilities of the outsourcer - Audits, reviews & inspection expenses are money well spent  Exit Strategy - Ensure an exit strategy is in place - Clearly define a strategy and process to return services “back home” or to another “vendor”  Counterparty Risk - “Mystery shopping” to assess underwriting and credit assessment processes to protect quality of receivables Confidential Page  27

Caveat Emptor  Country Risk - Political, social and legal climate can affect business continuity  Contractual Risk - Law of the land should enable you to enforce the contract  Accessibility - Transparency to your regulator to understand the activities of the outsourcing partner  Concentration and Systemic Risk - Exposure of industry to one vendor. Leads to lack of control over the vendor and systemic risk to the industry Confidential Page  28

Software As A Service • Increase • Minimize protection, compliance and transparency security challenges • Increase entry • Risk & compliance barriers for systems include competition corporate actions, • Increase approval customer workflows, retention, & Costs compliance and Opportunities personalization anti-money laundering checks • Enhance service • Predictable levels Clients • Sustainable Risks • Focus on core • Matched to cash competency flows • Launch new • Reduced products and Implementation services timeframes Confidential Page  30

The New-Age Business Enablement Company Technology Innovation  Cloud Computing  Virtualization  Service Oriented Architecture Delivery Model Innovation  Packaged/ License  Software as a Service  Software Appliance  Software Enabled Services/Everything As A Service Revenue Model Innovation  License  Subscription/ On Demand  Transaction Based  Build-Operate-Transfer/Joint-Ventures Confidential Page  31

Everything As A Service – Business Enablement Subsidiaries Fund Admin/ Investment Credit Served Banks NBFCs Insurance Registrars Banks/Funds Agencies Equity & Policy Credit Risk Processes Enabled Fund R & T/ Back Office Forex & Claims Evaluation/ Accounting IPO Processing Accounting Research Admin Processing Receipts/ Data Mining/ Customer Research Accounts Reporting Payments MIS interaction Activities Outsourced Txn Fulfilment Verification Dispatch Reconciliation Processing Services Business Process Application Managed Strategic Provisioning Consulting Development Services Staffing Application Provisioning Banking Insurance F.I.s Confidential Page  32

The Evolution Backed by Private Equity, Agile Financial Technology is a mid-sized Indian IT company focused on providing products and services to the Investment Banking, Asset Management, Insurance and Capital Market sectors M&A Strategy led by a strong management team 100% buy-out of IT/ITES companies focused Management teams of underlying Agile emerges as a vertically integrated on the Financial Services & Insurance companies are inculcated into Agile’s core mid-market player Sector team Create economies of scale, efficiency and a powerful sales, support, and marketing process to leverage a vertically integrated product & services offering Consolidated revenues of US$ 30mn in FY08 Confidential Page  34

The Constituents Investment Banking Insurance Management Technology Solutions BPO •Treasury & Dealing •General, Life, Medical, •Managed Services •Application processing Activity •Fund Management Broking, Banc Assurance •Security Consulting •Document Verification •Portfolio Management software •App maintenance/ •KYC •Liabilities Management •Takaful compliant development •Banks, AMCs, Insurance •V@R Management •EAI •Strategic Resourcing •ALM •Over 14 years in •Over 20 years in •Over 6 years in business •Over 20 years in business business •140+ employees business •130+ employees •120+ employees •Provide consulting, •2100+ employees •Ranked by IBS •Initial deployments in the development and •40 locations in India Intelligence (UK) as 6th M.E. at Emirates managed services to •India‟s largest domestic Overview largest Treasury solutions Insurance, Al Ain Al Ahlia banks, insurance BPO provider globally •Oldest Oracle partner in companies and asset •Provides transaction •Largest Indian wholesale India (1985) management companies processing services to banking software provider EVERY bank, mutual •Ranked as “Highly fund, and life insurance recommended Company” company in India by THE BANKER, India •Chola-Mitsui •Bombay Stock Exchange •Union National Bank •Mashreq, First Gulf •State Bank of India Key Clients •Bahrain National Holdings •Apollo DKV Bank. ADCB •Deutsche Bank •Barclays •Deutsche Bank •Amex, StanChart ` •Edelweiss •BNP Paribas •AIG Mutual Fund •Barclays •ONIC (Oman) •Edelweiss •StanChart Mutual Fund •AIG` •Astra (Singapore) •Kotak Life & Kotak AMC •Reliance Mutual Fund Confidential Page  35

Delivering Value • Insurance • Managed Services • General, Life, Broking, • Security (BCP/DRP) • Bank Assurance Consulting • Investment Bank/Fund • Strategic Resourcing Houses • Enterprise Application • Asset Management • Integration • Investment & PMS • • NBFC‟s/Banks Technology Products Services BPO KPO • Banking • Loan, Payments, Liabilities origination processing • Fund Accounting Services • Mutual Funds • IPO processing & Support • Origination, KYC • Equity & Forex Research • Insurance • Claims processing, KYC Confidential Page  36

Milestones Our BPO, Pamac processes over 7% of all retail applications & 27% of all new credit card applications processed in India Pamac is ranked amongst the largest Indian domestic BPO vendors by D&B Over 10mn transactions processed per annum. Over 70mn US$ of loans disbursed per annum The largest Mutual Fund in India (over 22 Bn$ AUM) uses iDEAL Funds iDEAL Funds processes 30% of India’s Mutual Fund’s AUM Around 45% of the money exchange transactions in India are managed by MercuryFX iDEAL is ranked as the 6th largest Treasury solution globally by IBS, UK; and the largest Indian wholesale banking software in terms of footprint Confidential Page  37

Our Engagement Process Horizontal Services Vertical Sales Organization Confidential Page  38

Our Presence Central & Eastern Europe Middle East  Russia  UAE (Direct Presence)  Poland  Oman  Kazakhstan  Bahrain  Kingdom of Saudi Arabia  Kuwait  Qatar Africa Asia Pacific  Mauritius (Direct Presence)  India (Direct Presence)  Kenya  Sri Lanka  Tanzania  Indonesia  Malawi  Malaysia  Ethiopia  Phillipines  Nigeria  Singapore (Direct Presence)  Ghana Confidential Page  39

iDEAL Investment Management Suite Investment/Fund Banks Finance Companies Houses/Insurance •iDeal Integrated •iDeal Funds – Front,, Mid & •iDEAL Finance – Treasury Management Back office for fund, Liabilities (Borrowings) •Mercury FX –Merchant investments and portfolio Management & Retail FX management •Quadryx – OTC •Quadryx - OTC •Fund Managers / Investment Derivatives Derivatives Managers in AMCs, •CALMS – ALM •RiskMark – Value @ Insurance Companies and •Clients Risk Portfolio Management •L&T Finance, Shriram companies •iDeal Wealth Transport, Canfin Homes, Management •FundMetrics –Risk & Sundaram Home Finance, Compliance reporting Fullerton India Credit, •Clients •iDeal Funds Performance HDFC, Kotak Prime •State Bank of India Reporting Limited, Fullerton India, Karnataka Bank,, Indian Bank, Axis Bank, OBC, •Clients Cholamandalam DBS Central Bank of Sri •AVIVA Life Insurance*, Lanka,, PNB Gilts, HDFC Bharti AXA Life*, TATA AIG Bank, ING Vysya Bank, life*, LIC (Debt portfolio), SocGen, Union National Shriram Life, Reliance Life, Bank (UAE) Reliance general, Sahara Life, BNH (Bahrain), Reliance MF, AIG MF, StanChart MF, HDFC MF, SBI MF, , Pru ICICI Confidential Page  40

Insurance Management Suite Insurance Brokers Banks Companies • Agilis - • BrokerWorld – • BancAims – Integrated Insurance Comprehensive Insurance Brokerage BancAssurance Enterprise Management Management Management • Rate comparison- • Non-life, Life, Policy Composite Administration- • Takaful Claims follow up- • Health & TPA’s Accounting • All life and non- life businesses covered • Powerful commission tracking Confidential Page  41

Technology Solutions Solution Framework Infrastructure Services • IntiCraft – A customer self service application for • Data Centers – Design, Security Paradigm, Mutual Funds Implementation, Movement and Support. • Life Insurance Portal – Customer, Agent and • Infrastructure Software Support – Database, Employee Portal – A virtual office for Life Middleware, OS, Security and Messaging Insurance Companies • Disaster Recovery Design and Implementation • HRMS add-ons – Expense Management, • ISO 270001 Consulting Appraisal System, Emp Intranet, Emp Helpdesk • Database and schema migration • Secondary Sales – Tracks movement of goods sold beyond the first point of sale Enterprise Application Integration System Integration • Application Integration • Hardware sizing and selection • Customer Application development and • Building a solution for solving a problem – may maintenance require a mix and match of third-party products •Middleware expertise on Oracle, IBM and Sybase Confidential Page  42

Business Enablement Services Verticals Serviced Fund Admin/ Investment Banks NBFCs Insurance Telco's Registrars Banks/Funds Equity & Policy Credit Risk Processes Enabled Fund R & T/ Back Office Forex & Claims Evaluation/ Accounting IPO Processing Accounting Research Admin Processing Receipts/ Data Mining/ Customer Research Accounts Reporting Payments MIS interaction Activities Outsourced Txn Fulfilment Verification Dispatch Reconciliation Processing Services Business Process Application Managed Strategic Provisioning Consulting Development Services Staffing Application Provisioning iDEAL 3rd Party/Client Apps Confidential Page  43

The Company We Keep Banks Investment Management Confidential Page  44

The Company We Keep Insurance Financial Services Confidential Page  45

Client Testimonials \" AGILis is a highly flexible software which provides for an enterprise wide solution for insurance companies. The integration between the underwriting, claims, agency management, reinsurance and accounts cuts operating headaches down dramatically. The interface is simple and intuitive. Further, being a web-enabled product scalability of operations across geography is immediate. \" Sanjeev Jha, Head (Retail) Cholamandalam-Mitsui General Insurance Confidential Page  46

Infrastructure  India - 40 cities across India, 80+ locations SPOKE SPOKE B(3) A(3) SPOKE SPOKE SPOKE A(2) C(1) C(3) - Hub & Spoke model SPOKE B(1) SPOKE B(2)  ISO 9001:2000 certified BPO SPOKE A(1) H U SPOKE H H C(2) B - 300+ employees in product development and U B B H. O. U B deployment A H. H U C SPOKE O. B F(2) - 150+ employees in technology support services SPOKE D(1) H U H F SPOKE F(1) U B - 2,100 employees in business enablement services D SPOKE E(1) B SPOKE E E(2) (BPO) SPOKE SPOKE D(2) F(3) SPOKE SPOKE E(3) - 7,600 resources deployed onsite in banks D(3)  UAE - Dubai Internet City - Dubai Outsourcing Zone - Sharjah Airport International Free Zone Confidential Page  47

Confidential Page  48

Technology Innovation For Banks In The "New Hard Times"

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