Data Science Solutions for OCBC Bank: Overcoming Challenges

This report evaluates the challenges faced by OCBC Limited, a Singapore-based bank, focusing on profitability and customer satisfaction. It explores the company's background, key challenges, and the impact of improvements in these areas. The report proposes solutions such as cloud computing to enhance efficiency and customer relationships. It also assesses financial feasibility, including startup capital, potential profits, and sources of funding. Furthermore, it identifies potential risks and mitigation plans, along with an implementation roadmap. The analysis includes financial data, such as the #OCBCCares Fund, and concludes with recommendations for OCBC Bank to leverage data science for sustainable growth and improved customer experience. Desklib provides this student-contributed assignment and other study resources for students.

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Table of Contents

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Introduction.................................................................................................................................................2
Background of the Company.......................................................................................................................2
Key Challenges in the Company and Impact of Improvement.....................................................................2
Solution to the Challenges...........................................................................................................................5
Financial Feasibility......................................................................................................................................7
Risks and Challenges and Mitigation Plans..................................................................................................8
Implementation of Roadmap....................................................................................................................11
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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Introduction
The report will help in evaluating the details about a Singapore based bank, OCBC Limited.
Brief information on the background of OCBC will help in understanding the aspects regarding
the execution of the business process of the firm. Moreover, the report will highlight the key
challenges faced by the OCBC bank throughout the nation. It will also provide solutions for
reducing the challenges. Two of the vital areas that can boost the overall growth of the firm are
profitability as well as the satisfaction of the customers. The enhancement in the quality of the
products will help in increasing the profitability of the firma and will bring more customers.
Moreover, the report will help in reflecting the details on sources of capital, return on investment
and amount of startup capital that are required by the OCBC Bank. It will analyze the challenges
and risks, and proper mitigation plans will be required. Finally, the implementation roadmap will
help in reducing these challenges and will facilitate the overall growth of the firm.
Background of the Company
Oversea-Chinese Banking Corporation (OCBC), Limited is financial services and multinational
banking corporation having its headquarter in OCBC Centre in Singapore. In 1932, because of
the Great Depression and consolidation of the three banks such as the Overseas Chinese Limited,
the bank of Ho Hong and the Chinese Commercial Bank Ltd, OCBC bank was born (Adzis,
Sheng and Bakar, 2018). The OCBC Bank is the second largest bank in South Asia having assets
over $454.9 billion. Moody gave a rating of Aa1 which makes it one of the world's most high-
rated banks. In the world, OCBC holds rank among the top 5 safest banks. It has over 570
branches in 18 countries.

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Key Challenges in the Company and Impact of Improvement
The key challenges faced by the OCBC Bank are as follows:
Profitability – The service investors of Moody had said that OCBC has been facing an
increasing problem in operating conditions both at regional markets and home which results in a
rise in pressure on profitability and the quality of the asset (Keffala, 2015). Because of these key
challenges, OCBC's rating dropped. OCBC bank Singapore is exposed to weak corporate
financial conditions, a momentum of growth, the higher delinquency rate of the loan, slow trade,
and economic growth. The dependency on the global economy is also posing challenges to the
profitability of the OCBC Bank. It can be defined as a situation when the revenues and costs rely
on the state of the global economy. As revenue has gone down, it has affected the OCBC bank
(Firth, Li and Shuye Wang, 2016).
An efficient and proper financial planning is not performed in OCBC bank. As a result of which
cash is not used efficiently (Quan and Khoe, 2016). Net contribution percent and the profitability
ratio is below average. As the unique position of selling and the position of OCBC Bank is not
well-defined, competitors can attack this segment. OCBC Bank is not well at forecasting demand
which results in keeping higher inventory both in the channel and in the home nation as
compared to its competitors (Koh, 2018).
Customer Satisfaction – The challenge of customer satisfaction is another issue in OCBC Bank.
A survey has shown that customers do not trust the bank and are dissatisfied due to longer
waiting time during mobile banking (Isa et al., 2016). The other reasons are waiting for the
number to be called at the counter, standing in the queue at the ATMs and additional banking
charges. OCBC was recently facing a technical glitch at its banking network in Singapore, which
created difficulties for the customers to use the internet banking facility and the ATMs (Keffala

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and De Peretti, 2016). The investment in technology of OCBC Bank is not at parity with the
vision of the firm.
40% of the customers of the bank are either cancelling or stopping their banking services due to
the poor customer experience. The repetition of the same information is the main reason for
cancelling the present relation with the OCBC Bank. Many customers have complained that the
banking staffs lack the ability to remember their previous interaction with the customer (Keffala,
2016). As a result, seamless handovers led to frustration among the consumers as they have to
repeat their queries several times. 45% of the customers have to contact the bank at least twice to
solve one problem whereas 40% have to utilize more than one channel to solve the same problem
(Shaban and James, 2018)
The impact of improvement in these areas are as follows:
Profitability – The financial strategies of the bank must be taken care and occasionally changed
so that it is capable of adapting the downturns and emergencies and it can take advantage of the
substantial changes in the global economy (Rasheed and Chauhan, 2016). New marketing
policies can be an excellent break for OCBC Bank to determine its advantage in new technology.
Moreover, the expansion of the market can lead to the weakening of the benefit of competitors,
and thus OCBC Bank can increase its profitability as compared to other competitors (Khaliq et
al., 2017).
Implementation of an efficient financial system by the OCBC Bank can improve its profitability,
and increase the flow of funds from investors to borrowers. Foreign investment can increase the
profitability of the bank as the foreign investors can contribute to the bank by selling their bank
products in Singapore. Faster economic development and rise in interest rates of the bank can

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push up the borrowing costs (Winarso and Salim, 2017). Strong economic expansion indicates
that the bank might see growth in loans. Strong economic development and increasing rates can
allow the bank to charge more for loans. As a result, the total interest income of the bank can
grow and improve the profitability of OCBC Bank.
Customer Satisfaction –New trends in customer behavior can provide an excellent opportunity
for OCBC Bank to expand into new product classes and build different revenue streams. The
head of human resource planning of OCBC bank, Ms. Jacinta Low said that Professional
Conversion Program (PCP) allows the organization to explore the alternative sources of banking
services to build the customer-centric policies (Shaban and James, 2018). The technical glitch
could be improved by properly investigating the reason and restoring the services as quickly as
possible to reduce the harassment of the customers. Increase in spending on customers and
economic uptick can increase the market share and capture new customers (Wanke, Azad and
Barros, 2016).
OCBC Bank has to improve the aspects of its business and its banking services and try to
improvise them for better customer services. The bank must take the initiative to learn the best
its competitors of the service provider in the banking industry (Rashid, Ramachandran and
Fawzy, 2017). The customer care is the best method to build a better and long term customer
relationship. The bank has to make its customers feel like having personalized experience and
personal relation while speaking with the staffs of the bank (Saha, Ahmad and Dash, 2015). It
could improve the customer satisfaction of the OCBC Bank.

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Solution to the Challenges
ODBC Bank needs to address its challenges of profitability and customer satisfaction. There is a
need to find out such systems that do not depend on like-system migration and the challenges of
the bank could be solved without any interruption. The banking sector has been slow in
implementing cloud computing as they fear the issues of consistency, regulatory and security
risks (Sufian and Kamarudin, 2016). But this technology is slowly changing the banking and
finance sector. It can increase the efficiency of the bank and can create an infrastructure to
deliver the best services to its customers.
The technology of cloud computing can create opportunities for OCBC Bank to directly connect
with their customers (Yip and Bocken, 2018). The cloud computing can help in providing the
digital services for maintaining the customer relationships anywhere and anytime. Internet helps
in several services such as to store, manage and access the information and so it has become
easier for both the bank and its customers (Sufian, Kamarudin and Md. Nassir, 2017). The cloud
computing is a technique which can help to organize and combine all the services and challenges
of the bank and decrease the time and effort of both the bank and its customers.
The development of cloud computing can enable the bank to be more customer-centric and
digitalize its business and wealth. This technology can build a multi-channel relation with the
consumers at every phase of its service. It can help to store, backup and recover large data of the
customers of the OCBC Bank and solve the issues of cybercrime. The cloud computing could
not only the store data but can also help in various other services such as to deliver the software,
transfer the data, update and recovery of data (Sulaiman@ Mohamad, Mohamad and Hashim,
2018). It can also increase the turnover of OCBC Bank by providing cost-effective cloud
solutions. The cyber-attacks by the hackers can be reduced with the help of cloud computing.

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OCBC Bank already uses the Fintech technology named as The Open Vault. The cloud
computing technology can help the Fintech technology to continually maintain the substantial
growth of the bank. The most vital aspect of this technology is to reduce the challenges of the
bank related to its profitability. It can completely secure the confidential data of the bank which
can further reduce the cybercrime (Uribe, Chuliá and Guillén, 2017). It also helps to analyze the
risk factors of the bank’s business so that the main focus will be on its business and the crucial
data. The cloud computing technology can help the OCBC Bank in managing various challenges
and demands of the banking world.
Financial Feasibility
In the year 2017, OCBC Bank has launched #OCBCCares Fund for the Environment and has
aimed to provide S$100,000 every year. This was planned to support the projects that will
improve the environmental landscape of Singapore. On 2018, OCBC Bank has declared that it
will provide S$87,000 to six projects which will address the issues of environmental
sustainability in Singapore. The fact that the bank could fund six projects at an amount less than
their fund commitment is a positive signal that their initiatives for protecting the environment of
Singapore are not expensive missions.
The bank has hoped that the other firms of Singapore also come on board to provide support in
these projects. The bank has received 28 proposals for fund between S$2,000 to S$150,000.
Moreover, the applicants are from different backgrounds and ages between 20 years to 69 years.
OCBC Malaysia has still not released its 2018 financial report. But, on the basis of the data on
the website of its parent company, in 2nd Quarter of 2018, the total profit of OCBC has fallen
12% from the previous year to RM207 million. It has indicated its profit of 1st Half of 2018 has

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declined 2% to RM451 million. But the net income in 1st Half has increased 3% to RM1.24
billion.

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Budgeted Capital S$100,000 (for each project)
Start-up Capital S$87,000 (total for six projects)
Sources of Start-up Capital OCBCCares Fund for the Environment, other
firms of Singapore
Potential Profits S$100,000 - S$87,000 = S$13,000
Table: (Financial Feasibility of OCBC Bank)
Risks and Challenges and Mitigation Plans
Risks Mitigation Plans
Unclear Role of the bank Determine the role of the bank. Engage
professional management if needed in order
to clearly define the roles and duties
Governance of banking services and taking
risks in facilitating the loans are subject to the
challenges of influencing the decisions
created on political concerns more than the
strict financial concerns
A separate advisory committee can be set up
to balance the functions of the independent
board of directors. An independent
commission will be needed. Political
concerns might impact the current funds of
the bank. Clearing up the 28 funds proposals
and using it by the bank might increase the
transparency of the bank’s investments.
Self-Funding projects might reduce the
limitations of the Singapore market while
deciding the borrowing capacity of the bank
Each loan request must provide the relevant
information to bank needed by the markets,
including sources of repayment and current
costs and revenues from the projects.

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Financial Advisors will continue to advise the
bank on its financial condition and rating
forecasts. The bank will continue to access
the markets even for the projects that were
initially funded internally.
Failing to fund the projects with long -term
funding and low-interest rates. The increase in
rates in future can risk the external financing.
The OCBC bank is currently investing its
funds at a Weighted Average Maturity for less
than a year. With internal financing, the bank
can effectively lengthen its loans to a longer
term and higher interest rate. It can offset the
concerns over the perceived market
requirements.
Internally funding the long term projects can
reduce the liquidity of the bank
An alternate way to maintain the liquidity is
low cost, particularly with local banks and
collateral repurchase contracts.
Lowering of the security needs in order to
incentivize the local organizations to lend
more can subject the bank to the increased
risk of project failure
Extra collateral can be reduced as it might
substitute the local loans, possibly by 100%
Funding for the projects might increase the
organizational costs of the bank
Most of the banking services can be turned
into a new entity. The implementation can
allow the bank to grow into complete banking
services without depending on external

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consulting and staffing.
Existing commercial banks of Singapore
might view this initiative as a competitive
threat, thereby risking the state charter and
cooperative relations.
Focus at first on the intra-city loans. Look for
alternative ways for the collateral needs on
investments with the other organizations or
banks to increase their capacity to lend
locally. Need external funding to be
introduced at the request of the bank.
Unrestricted cash of the bank can be a source
of inequity for a bank.
Banking services which are not state
chartered does not need separate equity. On
chartering a bank, adequate capital can be
provided. The bank can get a high yield on
those funds. Alternate sources of investment
could also be taken like Charitable Funds,
Mini-Bond funded by the citizens and the
Bonds issued from public entities.
Involvement of the bank in environmental
projects could find one way, or another can
reduce the funds for other projects while
guaranteeing the investments for the bank.
Review the materials of investment and make
sure that disclosures are satisfactory, and does
not indicate the credit support of the bank.