Post on 15-Jan-2017
Proposal for Gordan GekkoBanking & Investments
Eric Hasty Prajakta Patil
Rachel Robins Muyang(Robb) Su
Agenda
1. G.G Banking & Investment Overview
2. Recommendation
3. Implementation
4. Timeline
5. Governance Structure
6. Financial Analysis
7. Risk Mitigation
8. Scenario Analysis
Page 3
LEADERin the industry
OPERATIONALwithin time and budget
constraints
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Enter the commercial
banking market
How can G.G integrate
net interest margin into
the current revenue
stream?
DIVERSIFICATIONIn business
Search for business
opportunities to expand
revenue stream and
increase profitability
Recommendations TimelineImplementation RiskFinancial ScenarioOverview
Overview
Governance
Page 4
Enter the Direct Banking Space
RecommendationsTimeline Implement Risk Cost/Benefit Future SolutionsBackground
License
Core
Banking
Platform
Convert to
Direct Bank
Acquire an
Existing
Bank
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Expect Net
Interest Margin
near 2% with
deployment
Conservative Net
Present Value
estimation of
$28MM after 10
years
Example Target:
BNB Hana Bank
► Source: FDIC SDI
Recommendations TimelineImplementation RiskFinancial Scenario Overview Governance
Page 5
Operational Model – SaaS model with Cloud Deployment
Private
Cloud
Deployment
►Scalable
►Flexible
►Shared
access
Software
as a
Service
►Adaptable
►Cost
effective
►Fast
deployment
Reduced Cost of
►Human
Resources
►IT infrastructure
►Upgrades and
Maintenance
Recommendations TimelineImplementation RiskFinancial Scenario Overview Governance
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Page 6
Knowing the Customers for Online Banking
Who They Are:
Mid-market customers among
heaviest users
Source: EY Global Commercial Banking
Survey 2014
How to Reach Them:
Advertising with Email and Direct Mail and New
Customer Promotions
What They Want:
Recommendations TimelineImplementation RiskFinancial Scenario Overview Governance
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Page 7
Timeline
Phase 1
Marketing &
Deployment
System
Implementation
Vendor Selection
and Licensing
Acquisition &
Restructuring
Phase 2 Phase 3 Phase 4
Timing
Key tasks
24 weeks
►Acquire
Brick and
Mortar Bank
►Convert to
direct Bank
2 weeks
►Vendor
selection
►Contract
finalization &
SLA
4 weeks
►Customization
►Implementation
4 weeks
►Marketing
►Deployment and
operationalization
Recommendations TimelineImplementation RiskFinancial Scenario Overview Governance
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Page 8
Project Governance Structure
Strategy
Committee
Triad
Co-Leads
Integration
Lead
Project Co-Lead
Change ManagementDirector of
Quality Management
Project Co-Lead
Business ProcessVice President
of Operations
Project Co-Lead
TechnologyDirector of
Information
Systems
Triad Co- Leads
Project team
Recommendations TimelineImplementation RiskFinancial ScenarioOverview Governance
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Page 9
Financial Budget
77.00%
2.56%
8.90%
11.55%
BankAcquisition
CoreBankingSystem
Marketing
Professional Services
Professional Services 38,953,850
Bank Acquisition 259,691,000
Bank Assets 259,691,000
Core Banking System 8,620,000
Implementation 3,000,000
License Fee, recurring 2,600,000
Customization 220,000
Third Party Services & Hardware 2,000,000
Other Software Licensing 800,000
Marketing 30,000,000
Advertising 20,000,000
Promotions 10,000,000
Total Cost of Project 337,264,850
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Recommendations TimelineImplementation RiskFinancial ScenarioOverview Governance
Page 10
Risk Mitigation
Priority Evaluation
Low -
Medium -High -
Low -
Medium -
High -
Low -
Medium -
High -
Financial Impact
Possib
ility
Mitigation Strategy:
Expand the search criteria of target banks
Mitigation Strategy:
Invest in internal control systems and engage IT auditing professionals
► Unsuccessful Acquisition
► Lack of Customer Confidence
► Cyber SecurityIssues
Financial Impact
Possib
ility
Financial Impact
Possib
ility
Mitigation Strategy:
Align the marketing strategies with brand equity of G.G.
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Recommendations TimelineImplementation RiskFinancial ScenarioOverview Governance
Page 11
Scenario Analysis
Net Present Value Likelihood
Baseline Scenario $28,054,915 High
Best Case $181,148,630 Moderate
Worst Case ($283,622,808) Low
28 August 2015 Proposal for Gordon Gekko Banking & Investments
Recommendations TimelineImplementation RiskFinancial ScenarioOverview Governance
Thank you for your time!
Questions?
Page 13
Appendix A – Vendor selection and operational model
Excellent
Good
Satisfactory
Poor
Very poor
SaaS
Disaster
management
Risk Management
and Best practices
Fast DeploymentCost efficiencyOperational Model
In-Premise
Temenos T24
Ease of
integration
Addresses
regulations
Vertical SaaSVendor
Primatics Financial
EVOLV
Security and
Controls
► On premise vs SaaS Cost
Page 14
Appendix B- G.G Banking & Investments Holding company governance structure
Board of Directors
C-Suite
Vice Presidents
Directors
Triad Co- Leads
Page 15
Appendix C-Online banking customer satisfaction
Page 16
Appendix D- Direct bank vs Brick and Mortar bank
Page 17
Appendix E - Percentage of customers that switch bank based on pricing
Page 18
Appendix F - Direct vs Brick and Mortar Bank
Page 19
Appendix G - Getting a Distressed Bank Online
1. Loans: Assess loan portfolio. Banks fail most commonly because they
failed capital requirements not because of defaulting loans. Keep loans
that are performing.
1. Deposits: These drive commercial loan growth and interest margins.
1. Team: Have loan and deposit specialists. Talent is everything.
1. Cross sell: Look for opportunities to cross sell banking products. A good
relationship can open the door to get a mortgage in addition to a
commercial loan.
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Appendix H – Worst Scenario Analysis
$337,264,850 Project Budget
$155,814,600 Assets Sold at 60% of Book Value*
$77,573,850 Project Expenses
$76,631,489 Discounted Value
$22,989,447 Tax Provision
$53,642,042 Recoverable After Tax
($283,622,808) Loss
* http://www.investopedia.com/articles/bonds/08/distressed-debt-hedge-fund.asp
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Appendix I - Costs of Core Banking System Deployment
https://www.capgemini.com/resource-file-access/resource/pdf/core_banking_transformation_measuring_the_value.pdf
Average Cost Maximum Cost
Implementation $3.5 $20
License Fee $2.6 $13
Customization $2.2 $13
Third-Party Services $0.6 $2
Other Software License Fees $0.2 $0.8
(in millions)
Page 22
Appendix J - Salary Expense & FTE Calculation from Comparable Institutions
$95,000 Approximate Spend per FTE *
150 Conservative Staffing Estimate
$14,250,000 Initial Annual Salary & Compensation
* http://www.ally.com/files/sections/investor/pdf/2014-10k.pdf
* http://www.aboutschwab.com/images/uploads/inline/Schwab_2014_Annual_Report_complete.pdf
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Appendix K – Financial Projection