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Vas project RSC presentation final

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Project Presentation to Regional Steering Committee for Partnership between Standard Chartered & Prudential

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Vas project RSC presentation final

  1. 1. SCB/Prudential VAS Project RSC Presentation April 8, 2003
  2. 2. Objectives for Today 1. Review the estimates for the value-at-stake for the partnership 2. Discuss the regional and country market priorities, and how they fit with each partner’s overall strategy 3. Agree the best way to address the challenges and blockages to implementing the priorities 4. Discuss the Terms of Reference for Phase 2 5. Agree the immediate next steps and resourcing SG-2003-0163 FINAL 08_04_032
  3. 3. Phase 1 Background A detailed view of the value-at-stake has been developed for the partnership across 5 country markets; country market teams have been involved at every stage of the project to ensure their understanding Phase 1 Objectives Phase 1 Process • To review, evaluate and prioritise options to develop: • We have completed country market interviews with all the top - distribution channels, products, penetration, customer teams in each of the five countries (25 people interviewed in segments and cross and up sell opportunities total) • To define the value-at-stake to both organizations in terms • Value-at-stake (VAS) analysis has been completed at a relevant to each customer, channel and product level across all countries • To set out some of the key issues and identify critical • Preliminary analysis of the opportunity from BFS customers in success factors and implementation risks Hong Kong & Singapore has been completed and will be further refined in phase 2 • Define a roadmap for Phase II implementation • The external benchmarking exercise (with IAB) has been • To articulate the additional non-tangible benefits from the kicked off, with full results expected in coming weeks; this strengthening of the partnership exercise is proving to be challenging and may need to be reviewed • We have held extensive discussions with the country market teams (CEOs/AD heads/CB heads/GMs wealth) of both Prudential & SCB to ensure their understanding and to validate the analysis SG-2003-0163 FINAL 08_04_033
  4. 4. Value-at-stake Methodology Value-at-stake has been calculated at a product, customer segment and channel level across the 5 country markets VAS Methodology Definitions Working Definition Customer Segments • PB Priority Banking - high net worth, or private banking,customers • For Prudential, value-at-stake is defined as the present value of new • OB Other Banking – mass-market, or general banking customers business premiums (APE) from sales of Prudential life insurance • CC Credit Card – customers that only hold a credit card products through SCB channels • M/A Mortgages & Auto – customers that hold secured lending products, except in Thailand where it includes customers with unsecured • For SCB, value-at-stake is defined as the present value of future personal loans commissions from the same sales • BFS Business Financial Services – small/medium enterprises • For calculation purposes only, the future is defined as FY 2003 through 2010 Channels • I/B Pru Branch-based Prudential-employed staff Major Assumptions • I/B SCB Branch-based SCB-employed staff (tellers, salespeople) • Mobile Sales staff (either SCB- or Prudential-employed) who make • The analysis assumes scale is reached by 2006, with minimum appointments with customers outside the branch growth rate for the remaining term of the partnership. We propose, • DM/TM Direct/tele-marketing channels – phone-based sales process however, to revisit the project findings every two years in pursuit of driving further growth and value creation Products Includes mainly low-value health/protection products sold via DM/TM • The analysis calculates value to 2010, although there will be some • A&H Includes higher value term life, whole life, pensions, and annuities residual value to be captured after this period • L&P Includes endowment, savings plans (e.g. Pru Wealth) and ILPs • S&I Mortgage-reducing term assurance, sold on the back of a mortgage • There is no additional value to either party from further co-operation in • MRTA non-insurance related products • No operating costs or capital investment for either partner are Other Annual premium equivalent = 100% API plus 10% SPI included in the value-at-stake estimates • APE SG-2003-0163 FINAL 08_04_034
  5. 5. Agenda • Regional Priorities 15 mins • Country Priorities 30 mins • Implementation Challenges 30 mins • Plan for Phase 2 15 mins • Next Steps 15 mins SG-2003-0163 FINAL 08_04_035
  6. 6. Current Status of the Partnership Hong Kong not only represents the majority of current sales, but has been the engine for growth across the region 2002 NB Premiums (APE) Share of NB Premiums over Time (APE) Malaysia Thailand % of Premiums US$m 3 8 45 74 98 CAGR Taiwan Hong Kong Singapore ’03f ~ 100% 100% since 90% launch DMTM Thailand 85% 80% 80% Mobile Taiwan 17% 70% Malaysia 91% 60% 60% Singapore 90% 50% Hong Kong 180% IB SCB 40% 40% 30% 20% 20% IB Pru 10% 0% 0% 0% 20% 40% 60% 80% 100% 1999 2000 2001 2002 2003f Total 2002 NB APE = US$74m SG-2003-0163 FINAL 08_04_036
  7. 7. Potential Customer Pools The customer pools in all markets are significant, and mainly have low penetration of Prudential insurance products SCB Customer Pools1 2002 Prudential Penetration2 2002 % of Customers Prudential In-force Policies Hong Kong Singapore Malaysia Taiwan Thailand as a % of SCB Customers 100% 45% MA PB 40% OB Sole CC 80% CC 35% M/A 30% 60% 25% 20% 40% OB 15% 20% 10% 5% 0% PB 0% 0% 20% 40% 60% 80% 100% HK SG MY TW TH Total SCB Customer Base = 2.8m1. Only usable customer base considered for Malaysia & Taiwan Source SCB team 2. In-force penetration = In force policies as of end of year ’02 / customer base as of end of year ‘02 SG-2003-0163 FINAL 08_04_037
  8. 8. Value-at-Stake Estimates Our analysis of the opportunity across the five markets suggests a potential value-at-stake of ~US$690m for Prudential, and ~US$260m for SCB Prudential Value-at-Stake Estimates1 SCB Value-at-Stake Estimates2 VAS (US$m) VAS (US$m) 900 300 800 250 700 600 200 500 150 400 300 100 200 50 100 0 0 HK SG TW MY TH BFS Total HK SG MY TW TH BFS TotalTotal VAS 350 155 55 50 30 50 690 Total VAS 110 75 30 15 10 20 260 (US$m) (US$m) 1.Discounted new business APE, 2003-10 2.Discounted commissions, 2003-10 Note: BFS analysis for HK & SG markets only 2.Dotted areas indicate value prior to CEO discussions (Prudential VAS ~$830m, SCB VAS ~$300m) SG-2003-0163 FINAL 08_04_038
  9. 9. Partnership Cash Flows Premiums are forecasted to grow at circa 20% annually through to 2006, driven mainly by growth in Life and Pensions products and new mobile channels Partnership Cash Flows1 Breakdown of Premiums US$m Customers Channels Products 160 151 Prudential NB Premiums SCB Commissions M/A DM/TM MRTA 140 131 120 114 98 CC Mobile S&I 100 80 74 OB IB SCB L&P 60 47 41 40 35 30 22 PB IB Pru A&H 20 0 2002 2003 2004 2005 2006 2002 2006 2002 2006 2002 2006 1.Cash flow projections in ’06 equals ’10 cash flows as an accelerated growth has been assumed in the ’02-’06 time frame (i.e. stable ’06-’10) SG-2003-0163 FINAL 08_04_039
  10. 10. Materiality of the Partnership If the value at stake can be achieved, the regional contribution from the partnership in ‘06 will rise from 9% to 19% of Prudential ’02 premiums, and 5% to 10% of SCB ’02 operating profit Prudential Perspective SCB Perspective NB APE (US$m) US$m 500 200 2002 Total NB Premiums 2002 Total Operating Profit 450 180 400 2002 Total Partnership NB Premiums 160 2002 Partnership Commissions 350 2006 Total Partnership NB Premiums 140 2006 Partnership Commissions 300 120 250 100 200 80 150 60 100 40 50 20 0 0 Hong Kong Singapore Malaysia Rest Of APAC Hong Kong Singapore Malaysia Rest Of APAC 1. Rest of APAC represents all other Asian operations for Prudential; However, it includes Middle East for SCB SG-2003-0163 FINAL 08_04_0310
  11. 11. Regional Initiatives In order to secure the value-at-stake at a country level, the regional agenda should focus on driving five key initiatives Value at Stake1 Pru SCB 1. Developing and implementing an effective regional blueprint for $262m $112m the in-branch SCB sales model (from Hong Kong learnings) 2. Develop an attractive Life and Pensions product suite to $232m $72m complement existing savings offer (long term pension plans etc.) 3. Identifying and implementing regional best practices for mobile $139m $48m channel models 4. Developing and distributing an attractive offer to Priority Banking $128m $42m customers 5. Developing a successful offering and distribution strategy to $47m+ $18m+ target BFS customers 1. These are not additive as there is overlap between initiatives SG-2003-0163 FINAL 08_04_0311
  12. 12. Agenda • Regional Priorities 15 mins • Country Priorities 30 mins • Implementation Challenges 30 mins • Plan for Phase 2 15 mins • Next Steps 15 mins SG-2003-0163 FINAL 08_04_0312
  13. 13. Key Messages • Although Hong Kong is forecast to grow more slowly than other markets, it remains the most significant country going forward, with growth coming from mobile channels and new life and pensions products - annual growth of 11% vs. average of 19% for total premiums, produces a 52% contribution by 2006 ($79m) vs. 71% today ($53m) • Growth in Singapore is predicated on building a multi-channel model to complement existing FSC sales and expanding the product suite to support that model - annual growth of 32% of new business premiums produces a 25% contribution in 2006 ($37m) vs. 17% today ($12m) • Malaysia is forecast to grow aggressively as the business develops mobile and in branch SCB channels to access mass market customers - annual growth of over 30% produces a 9% contribution by 2006 ($13m) vs. 6% today ($4m) • Taiwan’s focus on Priority Banking customers through multiple channels will drive aggressive growth beyond the existing card base - annual growth of 30% produces an 8% contribution by 2006 ($12m) vs. 6% today ($4m) • The low relative wealth of SCB’s customers in Thailand and low overall insurance penetration will limit the level of future premiums, despite aggressive forecasts for growth - annual growth of over 100% produces a 7% contribution in 2006 ($10m) vs. 1% today ($0.6m) SG-2003-016313 FINAL 08_04_03
  14. 14. Hong Kong (1) Although Hong Kong is forecast to grow more slowly than other markets, it remains the most significant country going forward 2002 2006 Annual Cash Flows • Total customers (‘000) 1,210 1,011 US$m - Priority Banking 40 56 - Other banking 746 585 100 Pru Premiums SCB Commissions 76 79 - Credit Card only 355 294 80 68 72 - M/A 70 75 53 60 • Overall penetration 15% 22% 40 18 19 20 21 - Priority Banking 9% 22% 13 20 - Other Banking 7% 20% - Credit Card only 34% 30% 0 - M/A 5% 13% 2002a 2003f 2004e 2005e 2006e • # of policies by channel 128,411 86,310 - I/B Pru 4,472 8,347 Premiums Splits - I/B SCB 14,598 23,248 Customers Channels Products - Mobile 3,815 12,287 - DM/TM 105,526 42,428 M/A DM/TM MRTA • Average APE per policy $411 $913 CC Mobile S&I - Accident & Health $91 $140 - Life & Pension $1,983 $2,112 OB IB SCB L&P - Savings & Investment $1,913 $2,019 - MRTA $376 $456 PB IB Pru A&H • SCB commission rate 24% 26% Prudential VAS $350m 2002a 2006e 2002a 2006e 2002a 2006e SCB VAS $110m SG-2003-0163 FINAL 08_04_0314
  15. 15. Hong Kong (2) Strategic Priorities Challenges Sustain Core Business Pru1 SCB1 1. Sustain the branch-based $245m $77m • Sustaining the current referral engine face-to-face channel 2. Develop new strategies to access $232m $71m • Effective lead generation outside branch traffic Other Banking customer segment Gain Momentum 3. Focus product development on $164m $47m appropriate L&P products • Developing the products at right price points for the customer segments 4. Develop an offer to target the $74m $23m Priority Banking customer segment • Developing and marketing integrated products and an advisory model 5. Continue to develop effective mobile $72m $21m channels • Recruitment, training, retention and lead generation 1. These are not additive as there is overlap between priorities SG-2003-016315 FINAL 08_04_03
  16. 16. Hong Kong (3) Potential Risks & Blockages Mitigating Actions External • Recently announced Securities and Futures Ordinance may • Study the full implications of the SFO to the current referral impact the ability to solicit customers within bank branches and needs analysis process • Get QC opinion on likely impact to ensure consistent understanding and appropriate action Internal • Overall customer acquisition strategy of SCB and its ability to • SCB to regularly share customer acquisition strategy updates grow PB customer base with PCA team • Develop the mobile sales channel and enhance the up sell effort • Alleviating space constraints for Prudential sales teams • Explore alternative options to house the mobile sales teams (mobile and in-branch) going forward • Sustaining the commitment and momentum of the business • Ensure knowledge transfer from the outgoing leadership post change in the respective leadership teams team • Get buy-in from CB heads/CEOs to support the recommendations of this project • Communicate the strategic importance of the partnership to the leadership teams of both organisations • Prudential sustaining capability to continue to develop appropriate and competitive products suitable for the channel • Sustain the effectiveness of the joint product steering group and customers SG-2003-016316 FINAL 08_04_03
  17. 17. Singapore (1) Growth in Singapore is predicated on building a multi-channel model to complement existing FSC sales, and expanding the product suite to support that model 2002 2006 Annual Cash Flows • Total customers (‘000) 369 419 US$m - Priority Banking 13 18 - Other Banking 275 316 40 Pru Premiums 37 - Credit Card only 65 65 30 SCB Commissions - M/A 30 24 16 20 18 20 12 14 • Overall penetration 3% 15% 10 12 - Priority Banking - 12% 8 10 5 - Other banking 4% 15% - Credit Card only - 8% 0 - M/A 4% 30% 2002a 2003f 2004e 2005e 2006e • # of policies by channel 8,720 33,206 - I/B Pru 8,720 5,813 Premiums Splits - I/B SCB - 14,510 Customers Channels Products - Mobile - 5,980 - DM/TM - 6,903 M/A DM/TM MRTA • Average APE per policy $1,417 $1,116 CC Mobile S&I - Accident & Health - $100 - Life & Pension - $957 OB IB SCB L&P - Savings & Investment $1,445 $1,656 - MRTA $524 $300 PB IB Pru A&H • SCB commission rate 42% 38% Prudential VAS $155m 2002a 2006e 2002a 2006e 2002a 2006e SCB VAS $75m SG-2003-0163 FINAL 08_04_0317
  18. 18. Singapore (2) Strategic Priorities Challenges Sustain Core Business Pru1 SCB1 1. Continue to focus on mass $134m $64m • Sustaining the referral engine to include market banking customers effective lead generation outside the branch traffic 2. Maintain current in-branch $50m $21m Prudential channel • Sustaining the productivity of operations as the S&I products are migrated to IB SCB channel • Retention and training of FSCs Gain Momentum 3. Enhance the savings and $123m $61m investment offering • Developing effective joint product planning to maintain the competitive advantage over 4. Develop an effective in-branch $79m $41m banking products SCB channel • Training, recruitment and licensing of SCB PFCs • Designing appropriate PFC incentives and reward programs 1. These are not additive as there is overlap between priorities SG-2003-016318 FINAL 08_04_03
  19. 19. Singapore (3) Potential Risks & Blockages Mitigating Actions External • MAS is expected to become stricter going forward and there might be a • Plan for a sales proposition that exceeds regulatory requirement fallout from FAA for bancassurance channel Internal • Belief in the relationship is poor and both parties openly express their • Regional CEOs to be directive about level of engagement within frustration country businesses • Communicate the strategic importance of the deal to the leadership of both organisations • Work towards completely changing attitude of the teams • Developing the capability to design an attractive and profitable product • Introduce a product steering committee backed by capability and suite for the BA channel desire to launch products • Proactively explore options to enhance/complement the product design support to the team • Misaligned incentives structure of the two sales teams (Prudential & SCB) • Study the incentive structure and take immediate steps to align the two at all levels • Building trust and cohesiveness between the two teams • Develop a clear and agreed agenda for the operational teams • Ensuring high-level acceptance of long-term benefits of multi-channel • Develop a joint implementation plan for introduction of new channels distribution strategy • Resolving the issue of orphan policies (existing bancassurance • Put in place a system to to provide appropriate customer contact, policy holders) follow up and cross sales • Lack of understanding of in-branch SCB channel with in shared distribution • Facilitate a dialogue with the various value centres in SCB value centre in SCB • Regional team to support with a blueprint of in-branch SCB channel SG-2003-016319 FINAL 08_04_03
  20. 20. Malaysia (1) Malaysia is forecast to grow aggressively as the business develops mobile and in-branch SCB channels to access mass market customers 2002 2006 Annual Cash Flows • Total customers (‘000) 564 816 US$m - Priority Banking 15 27 - Other Banking1 266 314 15 Pru Premiums 13 - Credit Card only 183 316 SCB Commissions 10 - M/A 101 160 10 7 6 • 5 5 Overall penetration 9% 16% 4 4 5 3 3 - Priority Banking 36% 44% - Other Banking 3% 10% - Credit Card only - 4% 0 - M/A 39% 55% 2002a 2003f 2004e 2005e 2006e • # of policies by channel 19,514 50,743 - I/B Pru 4,414 8,630 Premiums Splits - I/B SCB 14,981 20,029 Customers Channels Products - Mobile 120 9,990 - DM/TM - 12,093 M/A DM/TM MRTA • Average APE per policy $219 $259 CC Mobile S&I - Accident & Health - $79 - Life & Pension $31 $222 OB IB SCB L&P - Savings & Investment $1,386 $501 - MRTA $106 $106 PB IB Pru A&H • SCB commission rate 64% 47% Prudential VAS $50m 2002a 2006e 2002a 2006e 2002a 2006e SCB VAS $30m 1. Only usable customer base considered (70% of total other banking customer base) SG-2003-0163 FINAL 08_04_0320
  21. 21. Malaysia (2) Strategic Priorities Challenges Sustain Core Business Pru1 SCB1 1. Continue courting and deepening $13m $12m • Licensing and training the mortgages sales teams relationship with mortgage customers Gain Momentum 2. Enhance current savings and $33m $18m investment offering • Developing an attractive product offering given the regulated interest rate environment 3. Increase penetration into the mass $27m $14m market segment 4. Develop an effective in-branch SCB $20m $16m channel • Training and licensing of in-branch SCB and mobile sales teams 5. Develop effective mobile channel $8m $5m 1. These are not additive as there is overlap between priorities SG-2003-016321 FINAL 08_04_03
  22. 22. Malaysia (3) Potential Risks & Blockages Mitigating Actions External • Regulatory pressure is expected to force insurance • Pre-empt the regulatory change by addressing the companies to reduce premiums for products sold via issue now BA channel (which could be allowed to cause • Proactively prepare a response plan for reduced channel conflict) pricing for main products sold via the channel • Approval of the application for DM/TM operations by • Identify existing approved DM/TM operations Bank Negara • Develop understanding in dialog with the regulator Internal • Developing an attractive product suite • Prudential Malaysia to address the deficiencies (e.g. single premium linked products for the Priority • Introduce a product steering committee backed by Banking segment) capability and desire to launch products • Proactively explore options to enhance/complement the product design support to the team • Lack of understanding of in-branch SCB channel • Facilitate a dialogue with the various value centres with in shared distribution value centre in SCB in SCB • Regional team to support with a blue print of the in-branch channel SG-2003-016322 FINAL 08_04_03
  23. 23. Taiwan (1) Taiwan’s focus on Priority Banking customers through multiple channels will drive aggressive growth beyond the existing card base 2002 2006 Annual Cash Flows • Total customers (‘000) 226 220 US$m - Priority Banking 7 29 - Other Banking 7 9 15 Pru Premiums SCB Commissions 12 - Credit Card1 only 206 170 - M/A 9 7 12 10 7 6 • Overall penetration 12% 19% 4 5 3 - Priority Banking 1% 18% 1 2 2 1 - Other Banking - 13% - Credit Card only 14% 21% 0 - M/A - 9% 2002a 2003f 2004e 2005e 2006e • # of policies by channel 17,471 14,592 - I/B Pru - 1,354 Premiums Splits - I/B SCB 209 292 Customers Channels Products - Mobile - 2,330 - DM/TM 17,262 10,615 M/A DM/TM MRTA • Average APE per policy $242 $825 CC Mobile S&I - Accident & Health $216 $216 - Life & Pension $265 $876 OB IB SCB L&P - Savings & Investment - $2,579 - MRTA - $300 PB IB Pru A&H • SCB commission rate 24% 23% Prudential VAS $55m 2002a 2006e 2002a 2006e 2002a 2006e SCB VAS $15m 1. Only usable customer base considered (50% of total sole credit card customer base) SG-2003-0163 FINAL 08_04_0323
  24. 24. Taiwan (2) Strategic Priorities Challenges Sustain Core Business Pru1 SCB1 1. Maintain DM/TM productivity $17m $4m • Managing the operational issues of the DM/TM operation 2. Maintain credit card business $14m $3m • Suitability of credit cards base particularly concerning persistency Gain Momentum 3. Grow PB segment $34m $9m • Licensing and training a sophisticated sales team to target PB customers 4. Develop robust life and pension $26m $7m offering • Developing a channel focused product design capability and actuarial support 5. Create effective mobile team $23m $6m • Hiring, training and retaining FSCs 1. These are not additive as there is overlap between priorities SG-2003-016324 FINAL 08_04_03
  25. 25. Taiwan (3) Potential Risks & Blockages Mitigating Actions External • Regulation prohibiting Prudential’s sales person to solicit customers in the • Develop an alternative referral model SCB branch is still in effect (expected to be revoked Qtr 2 ’03) • Scan the regulatory environment for any changes • Plan and prepare in-branch FSC model for immediate implementation as soon as regulation is relaxed Internal • Developing a competitive and profitable product suite for the BA channel • Introduce a product steering committee backed by capability and desire to launch products • Proactively explore options to enhance/complement the product design support to the team • Ability of SCB team to deliver on its customer acquisition strategy for PB • SCB to regularly share customer acquisition strategy updates with PCA team segment • Develop a cross-sell strategy to increase the value from a small customer base • Misaligned incentives structure of the two sales teams (Prudential & SCB) • Study the incentive structure and take immediate steps to align the two at all levels • Develop a clear and agreed agenda for the operational teams • Building trust and cohesiveness between the two teams • Ensure a buy in from the country CEOs/CB heads on the recommendations of this project • Ensure rewards vs. efforts are balanced • Small contribution of bancassurance channel to overall NB premiums of Prudential TW • Conduct a review of the DM/TM organisational structure and revise • Re-organisation of DM/TM operations accordingly SG-2003-016325 FINAL 08_04_03
  26. 26. Thailand (1) The low relative wealth of SCB’s customers in Thailand will limit the level of future premiums, despite aggressive forecasts for growth 2002 2006 Annual Cash Flows • Total customers (‘000) 424 641 US$m - Priority Banking 6 16 - Other Banking 167 167 12 Pru Premiums 10 - Credit Card only 100 137 10 SCB Commissions - M/A1 (Unsecured) 152 321 8 7 6 • Overall penetration 0% 8% 4 3 4 2 - Priority Banking 1% 13% 1 1 - Other Banking 1% 17% 2 1 0 0 - Credit Card only - 8% 0 - M/A1 (Unsecured) - 3% 2002a 2003f 2004e 2005e 2006e • # of policies by channel 2,070 35,597 - I/B Pru 2,070 6,219 Premiums Splits - I/B SCB - 6,106 Customers Channels Products - Mobile - 11,590 - DM/TM - 11,682 M/A DM/TM MRTA • Average APE per policy $275 $278 CC Mobile S&I - Accident & Health $27 $30 - Life & Pension $258 $302 OB IB SCB L&P - Savings & Investment $489 $490 - MRTA - - PB IB Pru A&H • SCB commission rate 25% 31% Prudential VAS $30m 2002a 2006e 2002a 2006e 2002a 2006e SCB VAS $15m 1. M/A segment in Thailand includes customers with unsecured loans such as installment loans and personal loans SG-2003-0163 FINAL 08_04_0326
  27. 27. Thailand (2) Strategic Priorities Challenges Gain Momentum Pru1 SCB1 1. Open other channels $21m $11m • Training and licensing sales teams in-branch (in addition to IB Pru) SCB & mobile 2. Develop savings & investment $17m $8m • Developing product designing capability products 3. Ensure penetration into mass $16m $7m market banking customers • Setting up DM/TM operations 1. These are not additive as there is overlap between priorities SG-2003-016327 FINAL 08_04_03
  28. 28. Thailand (3) Potential Risks & Blockages Mitigating Actions External • Low acceptance of bancassurance as a concept • Enhance customer experience by developing a value and insurance in general in Thailand added sales and advisory model • Low awareness of Prudential’s brand and of the • Develop a marketing and promotion strategy to build bancassurance partnership awareness of the partnership Internal • Recruiting, training and retaining the sales teams • Develop a comprehensive recruitment and training programs • Lack of understanding of in-branch SCB channel • Facilitate a dialogue with the various value centres with in shared distribution value centre in SCB in SCB • Regional team to support with a blue print of the in-branch channel • Ineffective referral process • Improve referral numbers and management of processes • Develop appropriate incentives and rewards SG-2003-016328 FINAL 08_04_03
  29. 29. BFS Preliminary analysis of the opportunity in HK & Singapore suggests significant potential from this customer base, provided that an appropriate business model can be designed 2006 2006 2003 Base Stretch Base Case Cash Flows • # of customers (‘000) - SMEs US$m 40 52 70 - Employees 404 522 702 15 Pru Premiums 13 SCB Commissions 9 10 • Overall penetration 6 - SMEs 0% 2% 2% 4 5 3 - Employees 0% 2% 3% 2 0 • # of policies 2003f 2004e 2005e 2006e - SMEs 121 783 1,053 - Employees 2,224 8,874 21,065 Stretch Case Cash Flows US$m • Average APE per policy - SMEs 2,500 2,500 2,500 40 Pru Premiums - Employees 1,266 1,266 1,266 SCB Commissions 29 30 18 • SCB commission rate 20 - SMEs 32% 32% 32% 10 9 10 6 - Employees 32% 32% 32% 3 0 Base Stretch 2003f 2004e 2005e 2006e Prudential VAS $50m $100m SCB VAS $20m $40m SG-2003-0163 FINAL 08_04_0329
  30. 30. Agenda • Regional Priorities 15 mins • Country Priorities 30 mins • Implementation Challenges 30 mins • Plan for Phase 2 15 mins • Next Steps 15 mins SG-2003-0163 FINAL 08_04_0330
  31. 31. Implementation Challenges Realising the full opportunity from the partnership will require overcoming significant blockages to growth at both the country and regional levels Potential Challenges Mitigating Actions • Aligning the senior operational management teams of both organisations • Facilitate the process of building a cohesive agenda for the on goals for the partnership and gaining their commitment given that management teams of both organisations - materiality of the business differs significantly across the organisations • Ensure that the regional CEOs/CB heads are held accountable for the - relationships have been strained in the past relevant KPIs - ensuring that efforts are sustained despite initial setbacks is a • Engineer early successes and provide guidance to country teams to challenge manage the transition • Developing a consistent incentive structure for both SCB and Prudential • Study the performance measurement system for both organisations teams at all levels especially at the front line sales team level to identify issues and rectify accordingly • Implementing a joint product planning, enhancing product design • Instigate a joint product steering committee representing all groups capability and a proactive product portfolio management process within • Regional team to support Prudential • Developing a process to engage the different value centres (credit cards, • Facilitate a dialogue with SCB value centres and guide the overall mortgages, unsecured lending, shared distribution) in SCB in order to discussion to avoid missed opportunities systematically plan launch of new channels • Developing a process to manage the value of a customer relationship • Understand the drivers of customer loyalty and create further opportunities to cross sell • Develop key operational measures to track customer loyalty • Review current planning processes and operational structure to identify potential improvements SG-2003-016331 FINAL 08_04_03
  32. 32. Resource Requirements To deliver the value-at-stake, the partnership would require approximately 1500 sales staff by ‘06, of which 350 would have to be new recruits (based on forecasted productivity) 2002 2006 Cross- Cross- IB PRU IB SCB Mobile DM/TM sell Total IB PRU IB SCB Mobile DM/TM sell Total HK • # Salespeople 52 290 68 93 10 513 48 321 90 42 21 522 • Policies/person/mth 7 4 5 95 7 21 12 6 10 85 12 14 SG • # Salespeople 31 - - - - 31 32 199 35 7 8 280 • Policies/person/mth 23 - - - - 23 15 6 12 85 15 9 MY • # Salespeople 28 104 11 - - 143 59 139 51 33 22 305 • Policies/person/mth 13 12 1 - - 11 12 5 12 30 12 14 TW • # Salespeople - 15 - 50 - 65 9 5 22 28 9 73 • Policies/person/mth - 1 - 29 - 22 12 5 8 29 12 17 TH 23 - - - - 23 75 102 158 16 4 355 • # Salespeople • Policies/person/mth 8 - - - - 8 7 5 6 60 7 8 Note: 1. IB Pru includes FPMs & FSCs; IB SCB includes CRMs, CSRs, PFCs; Mobile includes both SCB & Pru mobile sales teams; cross sell includes CREs 2. ’06 forecast of sales people required based on assumed productivity (policies/person/mth); productivity assumptions agreed with country teams 3. ’06 forecast of sales people for IB SCB channel based on sales of Non MRTA product by the channel @5 policies per mth per person productivity 4. ’02 IB SCB channel in TW is represents the pilot project undertaken in Qtr4 ’02 5. Source for ’02 information Pru & SCB teams SG-2003-0163 FINAL 08_04_0332
  33. 33. Agenda • Regional Priorities 15 mins • Country Priorities 45 mins • Implementation Challenges 30 mins • Plan for Phase 2 15 mins • Next Steps 15 mins SG-2003-0163 FINAL 08_04_0333
  34. 34. Objectives for Phase 2 Phase 2 will define detailed business plans for each country and each regional priority, to ensure that the value at stake identified in Phase 1 is fully captured Objectives Deliverables • There are four major objectives for Phase 2, • For each of the five countries, a detailed business which, when completed, will define in detail the plan, to cover the following: plan for the partnership for the next 3 years. - the key strategic initiatives over the next 3-5 These objectives are: years - detailed implementation plan for each initiative, 1. Define in detail the challenges to implementing including timing, resources required, major the recommended country market priorities milestones, potential blockages and mitigating actions 2. Prepare and evaluate a set of actions to - financial and strategic KPIs for the partnership overcome these challenges • For each of the five regional priorities, Phase 2 will 3. Lay out detailed business and implementation deliver a detailed proposal, to cover the following: plans for each of the countries - a blueprint for the priority (e.g. what is the most effective in-branch SCB sales model) 4. Develop a regional business plan that defines - specific country market variations, as the implementation plan and accountability for appropriate the regional priorities - a roll-out plan (to be coordinated with the country business plans) SG-2003-016334 FINAL 08_04_03
  35. 35. Timeline for Phase 2 Wk beg April 7 April 14 April 21 April 28 May 5 May 12 May 19 May 26 June 2 June 9 June 16 June 23 June 30 Country Strategies (1) • Hong Kong • Singapore Regional Priorities (1) • In-branch SCB Model • BFS Strategy Country Strategies (2) • Malaysia • Taiwan • Thailand Regional Priorities (2) • Priority Banking Offer • Life & Pensions • Mobile Channels Interim Report RSC Meetings Sponsor Meeting SG-2003-016335 FINAL 08_04_03
  36. 36. Agenda • Regional Priorities 15 mins • Country Priorities 30 mins • Implementation Challenges 30 mins • Plan for Phase 2 15 mins • Next Steps 15 mins SG-2003-0163 FINAL 08_04_0336
  37. 37. Next Steps • Reinforce the priorities as identified in phase 1 to the leadership teams across the country markets • Finalise and communicate the objectives and terms of reference for Phase 2 • Identify specific areas where the RSC can help to push forward the relationship • Develop the blueprint for the country business plans, and the key milestones for the regional priorities • Ensure that the implementation plans for the strategic priorities are reflected in the ’04 business plans of the country markets • Identify and implement quick wins that will demonstrate quickly the value that can be captured SG-2003-0163 FINAL 08_04_0337

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