The document summarizes the value-at-stake estimates and priorities for the partnership between Prudential and SCB across 5 Asian markets. Specifically for Hong Kong: - It remains the most significant market, forecast to contribute 52% of total premiums by 2006, though with slower growth of 11% annually - Growth will come from expanding mobile channels and new life and pension products - Penetration of Prudential products is forecast to increase from 15% to 22% of SCB's customer base in Hong Kong by 2006

1. SCB/Prudential VAS Project
RSC Presentation
April 8, 2003

2. Objectives for Today
1. Review the estimates for the value-at-stake for the
partnership
2. Discuss the regional and country market priorities, and how
they fit with each partner’s overall strategy
3. Agree the best way to address the challenges and blockages
to implementing the priorities
4. Discuss the Terms of Reference for Phase 2
5. Agree the immediate next steps and resourcing
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3. Phase 1 Background
A detailed view of the value-at-stake has been developed for the partnership across 5 country markets; country market teams have been involved at
every stage of the project to ensure their understanding
Phase 1 Objectives Phase 1 Process
• To review, evaluate and prioritise options to develop: • We have completed country market interviews with all the top
- distribution channels, products, penetration, customer teams in each of the five countries (25 people interviewed in
segments and cross and up sell opportunities total)
• To define the value-at-stake to both organizations in terms • Value-at-stake (VAS) analysis has been completed at a
relevant to each customer, channel and product level across all countries
• To set out some of the key issues and identify critical • Preliminary analysis of the opportunity from BFS customers in
success factors and implementation risks Hong Kong & Singapore has been completed and will be
further refined in phase 2
• Define a roadmap for Phase II implementation
• The external benchmarking exercise (with IAB) has been
• To articulate the additional non-tangible benefits from the kicked off, with full results expected in coming weeks; this
strengthening of the partnership exercise is proving to be challenging and may need to be
reviewed
• We have held extensive discussions with the country market
teams (CEOs/AD heads/CB heads/GMs wealth) of both
Prudential & SCB to ensure their understanding and to
validate the analysis
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4. Value-at-stake Methodology
Value-at-stake has been calculated at a product, customer segment and channel level
across the 5 country markets
VAS Methodology Definitions
Working Definition Customer Segments
• PB Priority Banking - high net worth, or private banking,customers
• For Prudential, value-at-stake is defined as the present value of new • OB Other Banking – mass-market, or general banking customers
business premiums (APE) from sales of Prudential life insurance • CC Credit Card – customers that only hold a credit card
products through SCB channels • M/A Mortgages & Auto – customers that hold secured lending products,
except in Thailand where it includes customers with unsecured
• For SCB, value-at-stake is defined as the present value of future personal loans
commissions from the same sales • BFS Business Financial Services – small/medium enterprises
• For calculation purposes only, the future is defined as FY 2003
through 2010 Channels
• I/B Pru Branch-based Prudential-employed staff
Major Assumptions • I/B SCB Branch-based SCB-employed staff (tellers, salespeople)
• Mobile Sales staff (either SCB- or Prudential-employed) who make
• The analysis assumes scale is reached by 2006, with minimum appointments with customers outside the branch
growth rate for the remaining term of the partnership. We propose, • DM/TM Direct/tele-marketing channels – phone-based sales process
however, to revisit the project findings every two years in pursuit of
driving further growth and value creation
Products Includes mainly low-value health/protection products sold via DM/TM
• The analysis calculates value to 2010, although there will be some • A&H Includes higher value term life, whole life, pensions, and annuities
residual value to be captured after this period • L&P Includes endowment, savings plans (e.g. Pru Wealth) and ILPs
• S&I Mortgage-reducing term assurance, sold on the back of a mortgage
• There is no additional value to either party from further co-operation in • MRTA
non-insurance related products
• No operating costs or capital investment for either partner are Other Annual premium equivalent = 100% API plus 10% SPI
included in the value-at-stake estimates • APE
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5. Agenda
• Regional Priorities 15 mins
• Country Priorities 30 mins
• Implementation Challenges 30 mins
• Plan for Phase 2 15 mins
• Next Steps 15 mins
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6. Current Status of the Partnership
Hong Kong not only represents the majority of current sales, but has been
the engine for growth across the region
2002 NB Premiums (APE) Share of NB Premiums over Time (APE)
Malaysia Thailand
% of Premiums US$m 3 8 45 74 98 CAGR
Taiwan
Hong Kong Singapore ’03f ~
100% 100%
since
90% launch
DMTM
Thailand 85%
80% 80%
Mobile Taiwan 17%
70%
Malaysia 91%
60% 60%
Singapore 90%
50%
Hong Kong 180%
IB SCB
40% 40%
30%
20% 20%
IB Pru
10%
0% 0%
0% 20% 40% 60% 80% 100% 1999 2000 2001 2002 2003f
Total 2002 NB APE = US$74m
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7. Potential Customer Pools
The customer pools in all markets are significant, and mainly have low penetration of
Prudential insurance products
SCB Customer Pools1 2002 Prudential Penetration2 2002
% of Customers Prudential In-force Policies
Hong Kong Singapore Malaysia Taiwan Thailand as a % of SCB Customers
100% 45%
MA PB
40% OB
Sole CC
80% CC 35% M/A
30%
60%
25%
20%
40% OB
15%
20% 10%
5%
0% PB 0%
0% 20% 40% 60% 80% 100% HK SG MY TW TH
Total SCB Customer Base = 2.8m
1. Only usable customer base considered for Malaysia & Taiwan Source SCB team 2. In-force penetration = In force policies as of end of year ’02 / customer base as of end of year ‘02
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8. Value-at-Stake Estimates
Our analysis of the opportunity across the five markets suggests a potential value-at-stake of
~US$690m for Prudential, and ~US$260m for SCB
Prudential Value-at-Stake Estimates1 SCB Value-at-Stake Estimates2
VAS (US$m) VAS (US$m)
900 300
800
250
700
600 200
500
150
400
300 100
200
50
100
0 0
HK SG TW MY TH BFS Total HK SG MY TW TH BFS Total
Total VAS 350 155 55 50 30 50 690 Total VAS 110 75 30 15 10 20 260
(US$m) (US$m)
1.Discounted new business APE, 2003-10 2.Discounted commissions, 2003-10 Note: BFS analysis for HK & SG markets only
2.Dotted areas indicate value prior to CEO discussions (Prudential VAS ~$830m, SCB VAS ~$300m)
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9. Partnership Cash Flows
Premiums are forecasted to grow at circa 20% annually through to 2006, driven mainly by growth
in Life and Pensions products and new mobile channels
Partnership Cash Flows1 Breakdown of Premiums
US$m Customers Channels Products
160 151
Prudential NB Premiums
SCB Commissions M/A DM/TM MRTA
140 131
120 114
98 CC Mobile S&I
100
80 74
OB IB SCB L&P
60
47
41
40 35
30
22 PB IB Pru
A&H
20
0
2002 2003 2004 2005 2006 2002 2006 2002 2006 2002 2006
1.Cash flow projections in ’06 equals ’10 cash flows as an accelerated growth has been assumed in the ’02-’06 time frame (i.e. stable ’06-’10)
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10. Materiality of the Partnership
If the value at stake can be achieved, the regional contribution from the partnership in ‘06
will rise from 9% to 19% of Prudential ’02 premiums, and 5% to 10% of SCB ’02 operating profit
Prudential Perspective SCB Perspective
NB APE (US$m) US$m
500 200
2002 Total NB Premiums 2002 Total Operating Profit
450 180
400 2002 Total Partnership NB Premiums 160 2002 Partnership Commissions
350 2006 Total Partnership NB Premiums 140
2006 Partnership Commissions
300 120
250 100
200 80
150 60
100 40
50 20
0 0
Hong Kong Singapore Malaysia Rest Of APAC Hong Kong Singapore Malaysia Rest Of APAC
1. Rest of APAC represents all other Asian operations for Prudential; However, it includes Middle East for SCB
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11. Regional Initiatives
In order to secure the value-at-stake at a country level, the regional agenda should
focus on driving five key initiatives
Value at Stake1
Pru SCB
1. Developing and implementing an effective regional blueprint for $262m $112m
the in-branch SCB sales model (from Hong Kong learnings)
2. Develop an attractive Life and Pensions product suite to $232m $72m
complement existing savings offer (long term pension plans etc.)
3. Identifying and implementing regional best practices for mobile $139m $48m
channel models
4. Developing and distributing an attractive offer to Priority Banking $128m $42m
customers
5. Developing a successful offering and distribution strategy to $47m+ $18m+
target BFS customers
1. These are not additive as there is overlap between initiatives
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12. Agenda
• Regional Priorities 15 mins
• Country Priorities 30 mins
• Implementation Challenges 30 mins
• Plan for Phase 2 15 mins
• Next Steps 15 mins
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13. Key Messages
• Although Hong Kong is forecast to grow more slowly than other markets, it remains the most significant country going
forward, with growth coming from mobile channels and new life and pensions products
- annual growth of 11% vs. average of 19% for total premiums, produces a 52% contribution by 2006 ($79m) vs. 71%
today ($53m)
• Growth in Singapore is predicated on building a multi-channel model to complement existing FSC sales and expanding
the product suite to support that model
- annual growth of 32% of new business premiums produces a 25% contribution in 2006 ($37m) vs. 17% today ($12m)
• Malaysia is forecast to grow aggressively as the business develops mobile and in branch SCB channels to access mass
market customers
- annual growth of over 30% produces a 9% contribution by 2006 ($13m) vs. 6% today ($4m)
• Taiwan’s focus on Priority Banking customers through multiple channels will drive aggressive growth beyond the existing
card base
- annual growth of 30% produces an 8% contribution by 2006 ($12m) vs. 6% today ($4m)
• The low relative wealth of SCB’s customers in Thailand and low overall insurance penetration will limit the level of future
premiums, despite aggressive forecasts for growth
- annual growth of over 100% produces a 7% contribution in 2006 ($10m) vs. 1% today ($0.6m)
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14. Hong Kong (1)
Although Hong Kong is forecast to grow more slowly than other markets, it remains the
most significant country going forward
2002 2006 Annual Cash Flows
• Total customers (‘000) 1,210 1,011 US$m
- Priority Banking 40 56
- Other banking 746 585 100 Pru Premiums SCB Commissions
76 79
- Credit Card only 355 294 80 68 72
- M/A 70 75 53
60
• Overall penetration 15% 22% 40
18 19 20 21
- Priority Banking 9% 22% 13
20
- Other Banking 7% 20%
- Credit Card only 34% 30% 0
- M/A 5% 13% 2002a 2003f 2004e 2005e 2006e
• # of policies by channel 128,411 86,310
- I/B Pru 4,472 8,347 Premiums Splits
- I/B SCB 14,598 23,248 Customers Channels Products
- Mobile 3,815 12,287
- DM/TM 105,526 42,428 M/A DM/TM MRTA
• Average APE per policy $411 $913 CC Mobile S&I
- Accident & Health $91 $140
- Life & Pension $1,983 $2,112 OB IB SCB L&P
- Savings & Investment $1,913 $2,019
- MRTA $376 $456 PB IB Pru A&H
• SCB commission rate 24% 26%
Prudential VAS $350m 2002a 2006e 2002a 2006e 2002a 2006e
SCB VAS $110m
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15. Hong Kong (2)
Strategic Priorities Challenges
Sustain Core Business Pru1 SCB1
1. Sustain the branch-based $245m $77m • Sustaining the current referral engine
face-to-face channel
2. Develop new strategies to access $232m $71m • Effective lead generation outside branch traffic
Other Banking customer segment
Gain Momentum
3. Focus product development on $164m $47m
appropriate L&P products • Developing the products at right price points for
the customer segments
4. Develop an offer to target the $74m $23m
Priority Banking customer segment • Developing and marketing integrated products
and an advisory model
5. Continue to develop effective mobile $72m $21m
channels • Recruitment, training, retention and lead
generation
1. These are not additive as there is overlap between priorities
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16. Hong Kong (3)
Potential Risks & Blockages Mitigating Actions
External
• Recently announced Securities and Futures Ordinance may • Study the full implications of the SFO to the current referral
impact the ability to solicit customers within bank branches and needs analysis process
• Get QC opinion on likely impact to ensure consistent
understanding and appropriate action
Internal
• Overall customer acquisition strategy of SCB and its ability to • SCB to regularly share customer acquisition strategy updates
grow PB customer base with PCA team
• Develop the mobile sales channel and enhance the up sell
effort
• Alleviating space constraints for Prudential sales teams • Explore alternative options to house the mobile sales teams
(mobile and in-branch) going forward
• Sustaining the commitment and momentum of the business • Ensure knowledge transfer from the outgoing leadership
post change in the respective leadership teams team
• Get buy-in from CB heads/CEOs to support the
recommendations of this project
• Communicate the strategic importance of the partnership to
the leadership teams of both organisations
• Prudential sustaining capability to continue to develop
appropriate and competitive products suitable for the channel • Sustain the effectiveness of the joint product steering group
and customers
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17. Singapore (1)
Growth in Singapore is predicated on building a multi-channel model to complement existing FSC sales,
and expanding the product suite to support that model
2002 2006 Annual Cash Flows
• Total customers (‘000) 369 419 US$m
- Priority Banking 13 18
- Other Banking 275 316 40 Pru Premiums 37
- Credit Card only 65 65 30
SCB Commissions
- M/A 30 24
16 20
18
20 12 14
• Overall penetration 3% 15% 10
12
- Priority Banking - 12% 8
10 5
- Other banking 4% 15%
- Credit Card only - 8% 0
- M/A 4% 30% 2002a 2003f 2004e 2005e 2006e
• # of policies by channel 8,720 33,206
- I/B Pru 8,720 5,813 Premiums Splits
- I/B SCB - 14,510 Customers Channels Products
- Mobile - 5,980
- DM/TM - 6,903 M/A DM/TM MRTA
• Average APE per policy $1,417 $1,116 CC Mobile S&I
- Accident & Health - $100
- Life & Pension - $957 OB IB SCB L&P
- Savings & Investment $1,445 $1,656
- MRTA $524 $300 PB IB Pru A&H
• SCB commission rate 42% 38%
Prudential VAS $155m 2002a 2006e 2002a 2006e 2002a 2006e
SCB VAS $75m
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18. Singapore (2)
Strategic Priorities Challenges
Sustain Core Business Pru1 SCB1
1. Continue to focus on mass $134m $64m • Sustaining the referral engine to include
market banking customers effective lead generation outside the branch
traffic
2. Maintain current in-branch $50m $21m
Prudential channel • Sustaining the productivity of operations as the
S&I products are migrated to IB SCB channel
• Retention and training of FSCs
Gain Momentum
3. Enhance the savings and $123m $61m
investment offering
• Developing effective joint product planning to
maintain the competitive advantage over
4. Develop an effective in-branch $79m $41m banking products
SCB channel
• Training, recruitment and licensing of SCB PFCs
• Designing appropriate PFC incentives and
reward programs
1. These are not additive as there is overlap between priorities
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19. Singapore (3)
Potential Risks & Blockages Mitigating Actions
External
• MAS is expected to become stricter going forward and there might be a • Plan for a sales proposition that exceeds regulatory requirement
fallout from FAA for bancassurance channel
Internal
• Belief in the relationship is poor and both parties openly express their • Regional CEOs to be directive about level of engagement within
frustration country businesses
• Communicate the strategic importance of the deal to the leadership of
both organisations
• Work towards completely changing attitude of the teams
• Developing the capability to design an attractive and profitable product • Introduce a product steering committee backed by capability and
suite for the BA channel desire to launch products
• Proactively explore options to enhance/complement the product design
support to the team
• Misaligned incentives structure of the two sales teams (Prudential & SCB) • Study the incentive structure and take immediate steps to align the two
at all levels
• Building trust and cohesiveness between the two teams • Develop a clear and agreed agenda for the operational teams
• Ensuring high-level acceptance of long-term benefits of multi-channel • Develop a joint implementation plan for introduction of new channels
distribution strategy
• Resolving the issue of orphan policies (existing bancassurance • Put in place a system to to provide appropriate customer contact,
policy holders) follow up and cross sales
• Lack of understanding of in-branch SCB channel with in shared distribution • Facilitate a dialogue with the various value centres in SCB
value centre in SCB • Regional team to support with a blueprint of in-branch SCB channel
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20. Malaysia (1)
Malaysia is forecast to grow aggressively as the business develops mobile and in-branch
SCB channels to access mass market customers
2002 2006 Annual Cash Flows
• Total customers (‘000) 564 816 US$m
- Priority Banking 15 27
- Other Banking1 266 314 15 Pru Premiums 13
- Credit Card only 183 316 SCB Commissions 10
- M/A 101 160 10
7
6
• 5 5
Overall penetration 9% 16% 4 4
5 3 3
- Priority Banking 36% 44%
- Other Banking 3% 10%
- Credit Card only - 4% 0
- M/A 39% 55% 2002a 2003f 2004e 2005e 2006e
• # of policies by channel 19,514 50,743
- I/B Pru 4,414 8,630 Premiums Splits
- I/B SCB 14,981 20,029 Customers Channels Products
- Mobile 120 9,990
- DM/TM - 12,093 M/A DM/TM MRTA
• Average APE per policy $219 $259 CC Mobile S&I
- Accident & Health - $79
- Life & Pension $31 $222 OB IB SCB L&P
- Savings & Investment $1,386 $501
- MRTA $106 $106 PB IB Pru A&H
• SCB commission rate 64% 47%
Prudential VAS $50m 2002a 2006e 2002a 2006e 2002a 2006e
SCB VAS $30m
1. Only usable customer base considered (70% of total other banking customer base)
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21. Malaysia (2)
Strategic Priorities Challenges
Sustain Core Business Pru1 SCB1
1. Continue courting and deepening $13m $12m • Licensing and training the mortgages sales teams
relationship with mortgage customers
Gain Momentum
2. Enhance current savings and $33m $18m
investment offering • Developing an attractive product offering given
the regulated interest rate environment
3. Increase penetration into the mass $27m $14m
market segment
4. Develop an effective in-branch SCB $20m $16m
channel • Training and licensing of in-branch SCB and
mobile sales teams
5. Develop effective mobile channel $8m $5m
1. These are not additive as there is overlap between priorities
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22. Malaysia (3)
Potential Risks & Blockages Mitigating Actions
External
• Regulatory pressure is expected to force insurance • Pre-empt the regulatory change by addressing the
companies to reduce premiums for products sold via issue now
BA channel (which could be allowed to cause • Proactively prepare a response plan for reduced
channel conflict) pricing for main products sold via the channel
• Approval of the application for DM/TM operations by • Identify existing approved DM/TM operations
Bank Negara • Develop understanding in dialog with the regulator
Internal
• Developing an attractive product suite • Prudential Malaysia to address the deficiencies
(e.g. single premium linked products for the Priority • Introduce a product steering committee backed by
Banking segment) capability and desire to launch products
• Proactively explore options to enhance/complement
the product design support to the team
• Lack of understanding of in-branch SCB channel • Facilitate a dialogue with the various value centres
with in shared distribution value centre in SCB in SCB
• Regional team to support with a blue print of the
in-branch channel
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23. Taiwan (1)
Taiwan’s focus on Priority Banking customers through multiple channels will drive aggressive
growth beyond the existing card base
2002 2006 Annual Cash Flows
• Total customers (‘000) 226 220 US$m
- Priority Banking 7 29
- Other Banking 7 9 15 Pru Premiums SCB Commissions 12
- Credit Card1 only 206 170
- M/A 9
7 12 10 7
6
• Overall penetration 12% 19% 4
5 3
- Priority Banking 1% 18% 1 2 2
1
- Other Banking - 13%
- Credit Card only 14% 21% 0
- M/A - 9% 2002a 2003f 2004e 2005e 2006e
• # of policies by channel 17,471 14,592
- I/B Pru - 1,354 Premiums Splits
- I/B SCB 209 292 Customers Channels Products
- Mobile - 2,330
- DM/TM 17,262 10,615 M/A DM/TM MRTA
• Average APE per policy $242 $825 CC Mobile S&I
- Accident & Health $216 $216
- Life & Pension $265 $876 OB IB SCB L&P
- Savings & Investment - $2,579
- MRTA - $300 PB IB Pru A&H
• SCB commission rate 24% 23%
Prudential VAS $55m 2002a 2006e 2002a 2006e 2002a 2006e
SCB VAS $15m 1. Only usable customer base considered (50% of total sole credit card customer base)
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24. Taiwan (2)
Strategic Priorities Challenges
Sustain Core Business Pru1 SCB1
1. Maintain DM/TM productivity $17m $4m • Managing the operational issues of the DM/TM
operation
2. Maintain credit card business $14m $3m • Suitability of credit cards base particularly
concerning persistency
Gain Momentum
3. Grow PB segment $34m $9m
• Licensing and training a sophisticated sales
team to target PB customers
4. Develop robust life and pension $26m $7m
offering • Developing a channel focused product design
capability and actuarial support
5. Create effective mobile team $23m $6m
• Hiring, training and retaining FSCs
1. These are not additive as there is overlap between priorities
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25. Taiwan (3)
Potential Risks & Blockages Mitigating Actions
External
• Regulation prohibiting Prudential’s sales person to solicit customers in the • Develop an alternative referral model
SCB branch is still in effect (expected to be revoked Qtr 2 ’03) • Scan the regulatory environment for any changes
• Plan and prepare in-branch FSC model for immediate implementation as
soon as regulation is relaxed
Internal
• Developing a competitive and profitable product suite for the BA channel • Introduce a product steering committee backed by capability and desire to
launch products
• Proactively explore options to enhance/complement the product design
support to the team
• Ability of SCB team to deliver on its customer acquisition strategy for PB • SCB to regularly share customer acquisition strategy updates with PCA team
segment • Develop a cross-sell strategy to increase the value from a small
customer base
• Misaligned incentives structure of the two sales teams (Prudential & SCB) • Study the incentive structure and take immediate steps to align the two at
all levels
• Develop a clear and agreed agenda for the operational teams
• Building trust and cohesiveness between the two teams
• Ensure a buy in from the country CEOs/CB heads on the recommendations
of this project
• Ensure rewards vs. efforts are balanced
• Small contribution of bancassurance channel to overall NB premiums of
Prudential TW
• Conduct a review of the DM/TM organisational structure and revise
• Re-organisation of DM/TM operations
accordingly
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26. Thailand (1)
The low relative wealth of SCB’s customers in Thailand will limit the level of future premiums,
despite aggressive forecasts for growth
2002 2006 Annual Cash Flows
• Total customers (‘000) 424 641 US$m
- Priority Banking 6 16
- Other Banking 167 167 12 Pru Premiums 10
- Credit Card only 100 137 10 SCB Commissions
- M/A1 (Unsecured) 152 321 8 7
6
• Overall penetration 0% 8% 4 3
4 2
- Priority Banking 1% 13% 1 1
- Other Banking 1% 17% 2 1 0 0
- Credit Card only - 8% 0
- M/A1 (Unsecured) - 3% 2002a 2003f 2004e 2005e 2006e
• # of policies by channel 2,070 35,597
- I/B Pru 2,070 6,219 Premiums Splits
- I/B SCB - 6,106 Customers Channels Products
- Mobile - 11,590
- DM/TM - 11,682 M/A DM/TM MRTA
• Average APE per policy $275 $278 CC Mobile S&I
- Accident & Health $27 $30
- Life & Pension $258 $302 OB IB SCB L&P
- Savings & Investment $489 $490
- MRTA - - PB IB Pru A&H
• SCB commission rate 25% 31%
Prudential VAS $30m 2002a 2006e 2002a 2006e 2002a 2006e
SCB VAS $15m 1. M/A segment in Thailand includes customers with unsecured loans such as installment loans and personal loans
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27. Thailand (2)
Strategic Priorities Challenges
Gain Momentum Pru1 SCB1
1. Open other channels $21m $11m • Training and licensing sales teams in-branch
(in addition to IB Pru) SCB & mobile
2. Develop savings & investment $17m $8m
• Developing product designing capability
products
3. Ensure penetration into mass $16m $7m
market banking customers • Setting up DM/TM operations
1. These are not additive as there is overlap between priorities
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28. Thailand (3)
Potential Risks & Blockages Mitigating Actions
External
• Low acceptance of bancassurance as a concept • Enhance customer experience by developing a value
and insurance in general in Thailand added sales and advisory model
• Low awareness of Prudential’s brand and of the • Develop a marketing and promotion strategy to build
bancassurance partnership awareness of the partnership
Internal
• Recruiting, training and retaining the sales teams • Develop a comprehensive recruitment and training
programs
• Lack of understanding of in-branch SCB channel • Facilitate a dialogue with the various value centres
with in shared distribution value centre in SCB in SCB
• Regional team to support with a blue print of the
in-branch channel
• Ineffective referral process • Improve referral numbers and management of
processes
• Develop appropriate incentives and rewards
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29. BFS
Preliminary analysis of the opportunity in HK & Singapore suggests significant potential from this
customer base, provided that an appropriate business model can be designed
2006 2006
2003 Base Stretch Base Case Cash Flows
• # of customers (‘000)
- SMEs US$m
40 52 70
- Employees 404 522 702 15 Pru Premiums 13
SCB Commissions
9
10
• Overall penetration 6
- SMEs 0% 2% 2% 4
5 3
- Employees 0% 2% 3% 2
0
• # of policies 2003f 2004e 2005e 2006e
- SMEs 121 783 1,053
- Employees 2,224 8,874 21,065
Stretch Case Cash Flows
US$m
• Average APE per policy
- SMEs 2,500 2,500 2,500
40 Pru Premiums
- Employees 1,266 1,266 1,266
SCB Commissions 29
30
18
• SCB commission rate 20
- SMEs 32% 32% 32% 10 9
10 6
- Employees 32% 32% 32% 3
0
Base Stretch
2003f 2004e 2005e 2006e
Prudential VAS $50m $100m
SCB VAS $20m $40m
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30. Agenda
• Regional Priorities 15 mins
• Country Priorities 30 mins
• Implementation Challenges 30 mins
• Plan for Phase 2 15 mins
• Next Steps 15 mins
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31. Implementation Challenges
Realising the full opportunity from the partnership will require overcoming significant
blockages to growth at both the country and regional levels
Potential Challenges Mitigating Actions
• Aligning the senior operational management teams of both organisations • Facilitate the process of building a cohesive agenda for the
on goals for the partnership and gaining their commitment given that management teams of both organisations
- materiality of the business differs significantly across the organisations • Ensure that the regional CEOs/CB heads are held accountable for the
- relationships have been strained in the past relevant KPIs
- ensuring that efforts are sustained despite initial setbacks is a • Engineer early successes and provide guidance to country teams to
challenge manage the transition
• Developing a consistent incentive structure for both SCB and Prudential • Study the performance measurement system for both organisations
teams at all levels especially at the front line sales team level to identify issues and
rectify accordingly
• Implementing a joint product planning, enhancing product design • Instigate a joint product steering committee representing all groups
capability and a proactive product portfolio management process within • Regional team to support
Prudential
• Developing a process to engage the different value centres (credit cards, • Facilitate a dialogue with SCB value centres and guide the overall
mortgages, unsecured lending, shared distribution) in SCB in order to discussion to avoid missed opportunities
systematically plan launch of new channels
• Developing a process to manage the value of a customer relationship • Understand the drivers of customer loyalty
and create further opportunities to cross sell • Develop key operational measures to track customer loyalty
• Review current planning processes and operational structure to
identify potential improvements
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32. Resource Requirements
To deliver the value-at-stake, the partnership would require approximately 1500 sales staff by ‘06, of which
350 would have to be new recruits (based on forecasted productivity)
2002 2006
Cross- Cross-
IB PRU IB SCB Mobile DM/TM sell Total IB PRU IB SCB Mobile DM/TM sell Total
HK • # Salespeople 52 290 68 93 10 513 48 321 90 42 21 522
• Policies/person/mth 7 4 5 95 7 21 12 6 10 85 12 14
SG • # Salespeople 31 - - - - 31 32 199 35 7 8 280
• Policies/person/mth 23 - - - - 23 15 6 12 85 15 9
MY • # Salespeople 28 104 11 - - 143 59 139 51 33 22 305
• Policies/person/mth 13 12 1 - - 11 12 5 12 30 12 14
TW • # Salespeople - 15 - 50 - 65 9 5 22 28 9 73
• Policies/person/mth - 1 - 29 - 22 12 5 8 29 12 17
TH 23 - - - - 23 75 102 158 16 4 355
• # Salespeople
• Policies/person/mth 8 - - - - 8 7 5 6 60 7 8
Note:
1. IB Pru includes FPMs & FSCs; IB SCB includes CRMs, CSRs, PFCs; Mobile includes both SCB & Pru mobile sales teams; cross sell includes CREs
2. ’06 forecast of sales people required based on assumed productivity (policies/person/mth); productivity assumptions agreed with country teams
3. ’06 forecast of sales people for IB SCB channel based on sales of Non MRTA product by the channel @5 policies per mth per person productivity
4. ’02 IB SCB channel in TW is represents the pilot project undertaken in Qtr4 ’02
5. Source for ’02 information Pru & SCB teams
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33. Agenda
• Regional Priorities 15 mins
• Country Priorities 45 mins
• Implementation Challenges 30 mins
• Plan for Phase 2 15 mins
• Next Steps 15 mins
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34. Objectives for Phase 2
Phase 2 will define detailed business plans for each country and each regional priority,
to ensure that the value at stake identified in Phase 1 is fully captured
Objectives Deliverables
• There are four major objectives for Phase 2, • For each of the five countries, a detailed business
which, when completed, will define in detail the plan, to cover the following:
plan for the partnership for the next 3 years. - the key strategic initiatives over the next 3-5
These objectives are: years
- detailed implementation plan for each initiative,
1. Define in detail the challenges to implementing including timing, resources required, major
the recommended country market priorities milestones, potential blockages and mitigating
actions
2. Prepare and evaluate a set of actions to - financial and strategic KPIs for the partnership
overcome these challenges
• For each of the five regional priorities, Phase 2 will
3. Lay out detailed business and implementation deliver a detailed proposal, to cover the following:
plans for each of the countries - a blueprint for the priority (e.g. what is the most
effective in-branch SCB sales model)
4. Develop a regional business plan that defines - specific country market variations, as
the implementation plan and accountability for appropriate
the regional priorities - a roll-out plan (to be coordinated with the
country business plans)
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35. Timeline for Phase 2
Wk beg April 7 April 14 April 21 April 28 May 5 May 12 May 19 May 26 June 2 June 9 June 16 June 23 June 30
Country Strategies (1)
• Hong Kong
• Singapore
Regional Priorities (1)
• In-branch SCB Model
• BFS Strategy
Country Strategies (2)
• Malaysia
• Taiwan
• Thailand
Regional Priorities (2)
• Priority Banking Offer
• Life & Pensions
• Mobile Channels
Interim Report
RSC Meetings
Sponsor Meeting
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36. Agenda
• Regional Priorities 15 mins
• Country Priorities 30 mins
• Implementation Challenges 30 mins
• Plan for Phase 2 15 mins
• Next Steps 15 mins
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37. Next Steps
• Reinforce the priorities as identified in phase 1 to the leadership teams across the
country markets
• Finalise and communicate the objectives and terms of reference for Phase 2
• Identify specific areas where the RSC can help to push forward the relationship
• Develop the blueprint for the country business plans, and the key milestones for
the regional priorities
• Ensure that the implementation plans for the strategic priorities are reflected in
the ’04 business plans of the country markets
• Identify and implement quick wins that will demonstrate quickly the value that can
be captured
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