Our client, a Cypriot systemic bank, is facing financial challenges and is seeking to transform its business model in order to improve profitability and secure their future growth and financial stability. As an external consulting firm, we have been hired to assess their current state and propose a series of initiatives for their transformation program. Your task is to create a draft ~10 min presentation outlining your high-level plan for this project. In order to do so, you will need to answer the following key questions: 1. What key ratios indicate that the Bank is experiencing financial difficulties and how do these compare to those of other Banks in the region? Please use as a reference for your analysis the Hellenic Bank of Cyprus financial statements of 2020 2. Suggest at least 3 initiatives (projects) that the Bank should implement in order to transform its operating model and strengthen their financial position. Briefly explain the impact that these initiatives will have on the Bank. 3. Choose one of the proposed initiatives and calculate the expected benefits for the Bank, including potential cost savings or revenue gains

1. GROUP
CASE
STUDY
Cypriot Systemic Bank
Bussiness model
Transformation
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2. INTRODUCTION
Improving the Financial Statement of our client through a
strategy of digital transformation
PROPOSED INITIATIVE
Analyzing four initiatives that our client should implement in order to
transform its operation model and strengthen its financial position
INITIATIVES
Key ratios investigation from our client’s financial statements that
indicate that the bank is facing financial difficulties
KEY RATIOS
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3. KEY
RATIOS
Our client, a Cypriot Bank, is
facing financial challenges and
is seeking to transform its
business model.
01
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4. KEY RATIOS
CAPITAL ADEQUACY RATIO
Measures a bank’s ability to
withstand fanancial losses
NPL COVERAGE RATIO
Measures a bank’s
ability to cover its NPLs
NET INTEREST MARGIN
Measures a bank’s
profitability
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5. KEY FINANCIAL METRICS
Cypriot
Systemic Bank
Bank of Cyprus Astrobank
ASSETS 15,856m 20,545m 2,832m
NII 285,543m 330m 49,668m
TOTAL
REVENUES
391,279m 567m 81,530m
BRANCHES 63 108 16
NIM 1.88% 1.84% 2.1%
NPL COVERAGE 46.9% 59% 43.9%
CAR 22.34% 19.3% 15.01%
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* Source: Cypriot banks’ financials statements of 2020

6. 02
INITIATIVES
Analyzing four initiatives that the Bank
should implement in order to tranform
its operating model and strenghten its
financial position
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7. OUR INITIATIVES
1
2
3
4
Management & Reduction of
NPEs/NPLs
Digital Transformation
Merger with a Real Estate Company
Grow & Sustain Wealth
Management Sector
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8. MERGER WITH A REAL ESTATE COMPANY
 Synergy by combining resources and
operations with the company
 Shared Services such as IT, human
resources and accounting
 Shared overhead costs such as rent,
utilities etc.
 New revenue streams such as
property management and
development
 Cross-selling additional products
and services to a larger customer
base
 Larger market share
 Access to a large portfolio of properties
which could be used as collateral for loans,
or even develop and sell it to generate more
revenue
 The combined expertise can improve risk
management over lending activities
01 Cost Savings
02 Increased Revenue
03 Other Activities
01
02
03
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9. MANAGEMENT & REDUCTION OF NPEs/NPLs
Follow EITHER a hybrid model by:
• Creating dedicated departments that manage
internally the bank’s Non-Performing Loans
• Out-source specific NPL management and
servicing activities to third-party entities
OR
Perform a “hive-down” process by:
• Separating and transferring its banking sector
into a newly created company-credit institute
(subsidiary)
Significant reduction of the bank’s NPLs stock
and NPL ratio
Reduction of the operational costs associated
with collecting and managing NPLs
Liquidity improvement allowing the bank to fund
new loans and investments
Improvement of the bank’s capital adequacy ratio
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10. GROW & SUSTAIN WEALTH
MANAGEMENT SECTOR
ACTIONS IMPACT
Diversify bank’s revenue streams
Grow bank’s fees and commissions income
Expand customer base (e.g., millennials, wealthy
women)
Grow the affluent segment which is more likely to
also use other banking services
Increase customer loyalty and retention
Carefully evaluate and select the investment
products offered to build clients’ portfolios
Create diversified portfolios :
• Include a broad distribution of investment
products (e.g., index funds, equity, bonds, real
estate funds)
• Incorporate sustainable investment products
into clients’ portfolios (e.g., Green bonds)
Provide financial planning services (e.g., Cash
flow and budgeting, retirement planning,
insurance planning)
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11. DIGITAL TRANSFORMATION
1
Increased efficiency and cost savings in the account opening process & improved
convenience and accessibility
Implementation of digital onboarding for new customers &
introduction of mobile and online banking services
Improved risk management and decision-making capabilities
Investment in data analytics and artificial intelligence
2
Reduced errors and increased speed in processing transactions
Automation of back-office processes such as loan underwriting
Mobile apps for account
balance checking and fund
transfer
Closing of physical branches
and redirecting customers to
online and mobile banking
services
Digital
Channels
AI &
Analytics
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12. 3
Access to new technologies and innovation to improve customer experience and
drive growth
Partnership with fintech companies
Mobile apps for account
balance checking and fund
transfer
Closing of physical branches
and redirecting customers to
online and mobile banking
services
New
Revenue
Streams
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13. 03
PROPOSED
INITIATIVE
Analysing the benefits of the
bank’s digital transformation
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14. DIGITAL
TRANSFORMATION
A 5 year plan of digital
transformation to increase the
Bank’s profitability would
require a total investment of 80
million euros in three different
segments
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15. INVESTMENT PLAN
DIGITAL CHANNELS
FINTECH SERVICES
Investing in digital platforms such as web
banking and social media marketing
Create new revenue streams as digital
payments and wealth management
AI & ANALYTICS
This investment would help the bank to
enhance customer service and experience
50%
31%
19%
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16. THE
OUTPUTS
• The bank should explore new revenue streams in fintech services sector. This would help to
diversify the bank's revenue streams and increase the total revenues by 15%.
• Implement digital channels for customer acquisition and servicing:
This would involve investing in digital platforms such as online banking, mobile banking, and
social media marketing to attract new customers and retain existing ones. This would also help
in reducing the expenses on physical branches and staff costs by 20%.
• Investing in artificial intelligence and analytics technologies would help the bank to better
understand customer needs and preferences, and to create more personalized products and
services. This would also help in automating some processes and reducing human errors and
will result in a reduction in administrative and other expenses by 15%.
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17. 58.961.850€
Increase Revenues from Fintech
26.416.600€
Reduction in Costs
16.524.000€
Reduction in Administrative and Other Expenses
ROI = 127.4%
Return on Investment
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18. ANY
QUESTIONS?
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19. THANK
YOU!
This presentation was
created by:
• Dimitrios Vrasidis
• Eirini Deloudi
• Dimitrios Konstantinidis
• Alexandros Lampidonis
• Alexandros Rasoulis
• Dimitrios Fotopoulos
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