Subramanian K. Improving Operating Leverage Using Hyperautomation...2025.pdf

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Improving Operating
Leverage Using
Hyperautomation
Unlock Strategic Advantages Across
Banking and Non-Banking Financial
Institutions
—
Kannan Subramanian R
Improving Operating
Leverage Using
Hyperautomation
Unlock Strategic Advantages
Across Banking and
Non-Banking Financial
Institutions
Kannan Subramanian R
Improving Operating Leverage Using Hyperautomation: Unlock Strategic
Advantages Across Banking and Non-Banking Financial Institutions
Kannan Subramanian R
Chennai, Tamil Nadu, India
ISBN-13 (pbk): 979-8-8688-0895-1
https://doi.org/10.1007/979-8-8688-0896-8
ISBN-13 (electronic): 979-8-8688-0896-8
Copyright © 2024 by Kannan Subramanian R
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Table of Contents
About the Author �½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½ix
About the Technical Reviewer �½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½xi
Acknowledgments �½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½xiii
Preface �½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½xvii
Chapter 1: Enterprise Operating Model �½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½�½1
1.1 Overview of a Commercial Bank .....................................................................2
1.1.1 Lines of Business ...................................................................................2
1.2 The “Production Model” of a Bank ................................................................12
1.3 Ullman Triangle .............................................................................................13
1.4 Enterprise Operating Model ..........................................................................15
1.4.1 Design of an Enterprise Operating model .............................................16
1.4.2 Build the Enterprise Operating Model...................................................22
1.4.3 Operate .................................................................................................28
1.5 What Is Activity-Based Costing? ...................................................................32
1.5.1 Definition – Push Cost Modeling ..........................................................32
1.5.2 Objectives and Concept ........................................................................33
1.5.3 The ABC Methodology and ENICM ........................................................35
1.6 What Is Time-Driven Activity-Based Costing? ...............................................40
1.6.1 Definition – Pull Cost Modeling ............................................................40
1.6.2 Concept ................................................................................................40
iii
Table of ConTenTs
1.6.3 Objective...............................................................................................41
1.6.4 Methodology .........................................................................................42
1.6.5 TABC Benefits .......................................................................................46
1.7 Activity-Based Enterprise Noninterest Cost Management (AENICM) ............47
1.7.1 Definition ..............................................................................................47
1.7.2 Concept and Objectives ........................................................................49
1.7.3 Example: Applying AENICM for Payments .............................................49
1.8 Siloed and Complex As-Is Environment ........................................................53
1.8.1 Banking Applications ............................................................................53
1.8.2 Complex Banking Operating Environment ............................................57
1.8.3 Enterprise Noninterest Cost Accounting ...............................................63
Chapter 2: As-Is Environment – Noninterest Cost Management �½�½�½�½�½�½�½�½67
2.1 Financial Accounting and Costing – Chart of Accounts.................................68
2.1.1 Chart of Accounts – Financial Books ....................................................68
2.1.2 Chart of Accounts – ENICM...................................................................70
2.2 ENICMS in As-Is Environment .......................................................................85
2.2.1 As-Is Cost Data Capture and Maintenance ...........................................86
2.2.2 Example: Allocation ..............................................................................94
2.2.3 Noninterest Cost of Products ..............................................................126
2.2.4 Costs of Customer/Customer Segment ..............................................128
2.2.5 Branch ................................................................................................130
2.2.6 Product Noninterest Revenue .............................................................132
2.3 Siloed Consequences ..................................................................................133
2.4 To-Be Enterprise Operating Model ..............................................................137
2.4.1 Risk Culture, Focus on Profitability, and Preventive Controls .............138
2.4.2 Process-Based Enterprise Operating Model .......................................139
2.4.3 Performance, Risk, Control, and Cost – Policies and Procedures .......139
iv

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