The New Age of Innovation

Behavioral Scoring of Individual Customers (2002)

Credit scoring based on the behavior of individual customers helps ICICI to understand customers and enables it to cocreate strategies for value creation across its customer lifecycle. ICICI, in this effort to understand its evolving consumer base, works with multiple partners with specialization in analytics to derive contextual insights and enhance consumer experiences. For example, this initiative maps a 360-degree view of its customers in terms of their engagement with the bank and searches for oppportunities to better inform customers and cocreate value.

Overseas Remittances: Money to India (2002)

Money2India is a remittance service offered by ICICI to capture the market of funds transferred to India by Indian nationals residing across the globe. Remittances from Indian expatriates back to India, through formal channels, were not a significant business till 2002. However, given the growing number of affluent Indian expatriates in the United States, Europe, and the Middle East and the restrictions on money transfers through unorganized sectors after 9/11, managers at ICICI saw a huge opportunity. Public sector banks from India such as the State Bank of India had a remittance business. They followed the traditional banking business processes and operated on a paper-based system for remittances from expatriates. It was a very slow process with no transparency, and obviously the consumer experience was not good. For example, on average it took around 10 days for the money sent by an expatriate in the United States to reach its final recipient in India. If the recipient was in a small town or village, the transfer could take even longer. ICICI created a digital bridge to integrate the U.S. and Indian markets through transactions between an ICICI account with JPMorgan in the United States and an ICICI bank account in India. ICICI leveraged the electronic transfer through JPMorgan and its electronic network of various branches across India to increase transparency to the expatriates and cut the cycle time from 10 days to less than 48 hours. ICICI currently enjoys over 30 percent market share of the $25 billion plus remittance market to India. ICICI has, more recently, introduced Indian rupee–denominated remittance cards usable in any ATM or over 100,000 merchant establishments in India.

Customized Corporate Banking Solutions (2003)

As noted earlier, the ICICI Bank has placed its ICT capabilities at the center of its value creation process, and it has an R&D lab with a small team of 40 people drawn from business and technology groups to experiment with new ideas. This combination of business and technology expertise enables the company to understand customer concerns and deliver unique solutions. These teams are provided incentives to identify unique solutions that enhance value to consumers. We illustrate with a few examples of how they have adapted products and processes to create unique value for customers.

ICICI was the first bank in India to introduce a check-scanning machine with its ATMs. All customer acknowledgment receipts for regular transactions include a small scanned image of the check, making it easier for consumers to track their transactions. Most banks in the United States still provide receipts with unique identification numbers, but consumers seldom use them due to the additional work needed to reconcile these receipts with their statements. The ICICI Bank integrated its magnetic ink character recognition (MICR) and image-scanning applications to provide this service. Similarly, for corporate banking, the bank has developed unique customized software applications to connect directly with enterprise systems of some of its large clients. ICICI has also developed unique solutions for its corporate customers. For example, large two-wheeler manufacturers in India, such as Bajaj Auto and TVS Motors, who sell over a million vehicles annually, face the challenge of reducing the float in clearing checks from their dealers countrywide. ICICI has delivered a cash management feature connecting dealers of these firms with their corporate offices so that information from a dealer’s check is itself treated as collection and directly linked to the financial systems of these manufacturers. This has reduced the collection time from weeks to a few hours.

This approach is closer to N = 1 and R = G, since the bank’s corporate customers in the past have had their own unique financial systems in different software platforms. ICICI has had to work with multiple global partners to customize this service and enhance its unique value to its customers. In another example, ICICI has partnered with the Austrian multinational firm Efkon, which specializes in electronic payment systems, to provide collection and cash management at over 2,500 retail outlets of Hindustan Petroleum Corporation Limited (HPCL), the second-largest oil marketing firm in India. In the first three years of its operation, the retail customer base for this payment solution has grown from a few thousand to over a million.

by C.K. Prahalad and M.S. Krishnan, Via The New Age of Innovation: Driving Cocreated Value Through Global Networks (2008)

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