High Level Blueprint
Cheque Acceptance and Cheque Issue —
End-To-End Operational Review
e Before submitting the blueprint check you have fully completed the form.
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e If you wish to check that you are using the current version of this template
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Redgers on, GRO __
Confidentiality Status! Confidential =I
Change Originator
Martin Box — Supply Chain Programme
& (e) ti nal Efficiency —}. j
Business Solutions
Manager Sukhi Kaur:
Financial Analyst . ay pew
Assessed ? Patricia O'Neill — £~
Yes >I
Budget Code
Assigned ? 2544163
Yes I
Sponsoring I Operations I
Directorate
To be completed by the DIA Team following High Level
Blueprint Assessment Forum
HLBP number
: RS 1499
Post Office Ltd
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Date : 06/02/08
The contents of this document must not be reproduced, wholly or in
part, used or disclosed without the prior written permission of Post
Office Ltd. This copyright applies to all forms of storage and
reproduction in which information may be embodied including,
without limitation, magnetic storage, computer printout and visual
display.
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1. SOURCE OF IDEA
Is the Change?
Planned I I Post Office Led I
If the change is Strategic please identify the primary Strategic
Initiative that this change is linked to. (To be completed. in.......
conjunction with the Strategic Programme Office) GRO :
Operational Effidency El Sormmnrrnrrnnnnnt
Please use dropdown box to indicate the alignment of this HLBP
with the Strategic Plan and provide an explanation in the space
below.
3-Stronglinkto, orkey component of, one or more strateqicinitiative: ‘I
2. BACKGROUND OF CHANGE
Post Office LTD accepts cheques for payment of goods for many
services over the Post Office counter. We spend £ms per annum
supporting cheque processing, cheque error resolution, cheque
losses/write off and resulting bank charges.
At a recent POL Conformance and Compliance workshop,
Operational Efficiency & P&BA plans were reviewed. The working
group endorsed Operational Efficiency and P&BA proposals that
we should conduct a POL wide feasibility on cheque acceptance.
The working group also endorsed that we looked at the cheque
issuing from our Cash Centres to see if an alternative approach can
be taken forward.
The working group acknowledged that there is currently silo-based
activities taking place on cheque acceptance across the company,
but this has not been brought together in one business wide
activity. Areas such as Security, Product Teams, P&BA, Area
Intervention are looking at isolated issues and incidents, but no
holistic view is taking place, hence the need for a full feasibility
study.
3. DESCRIPTION OF CHANGE
Undertake a full feasibility study that ascertains the answers to the
following questions [along with the points documented in section 5]
and proposes resolutions where there are issues:-
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e Why Subpostmasters/branches do not comply with current
cheque processes
e If our current Ops Manuals and initial training for cheque
acceptance is fit for purpose.
e If we provide branches with confusing and/or contradictory
instructions regarding cheque acceptance, such as differing
acceptance rules from one product to another and cheques that
can and can’t be made payable to POL and/or to the Clients
e Whether there any Horizon Method Of Payments inconsistencies
e What the levels of handwritten cheque errors that are caused by
human error
e What ‘easy way round’ Horizon there is for changing cheque
data
e The levels and types of known fraud whether product, branch or
customer
e The issues caused by a lack of a tracking system: from
transaction at the branch; from despatch at the branch; to receipt
and process at EDS. Assessment to include what reference data
and/or APADC and/or APOP changes could be made to alleviate
current issues
e What the full costs are for the cheque method of payment
e What the delays are to POL receiving credit and the financial
impact this has on the company
4. OBJECTIVE
Production of a feasibility report that examines in detail all aspects
of:-
o cheque acceptance at Post Office branches;
o impact of branch cheque acceptance within P&BA;
o cheque payments at both the branches and cash centres,
o completion of personal banking transactions and impacts on
back end systems;
o impact of branch and cash centre cheque payments within
P&BA.
5. SCOPE
In addition to the points within section 3, the Feasibility Report is to:-
e Assess the products we accept cheques for at Post Office
Counters and supporting data analysis by client such as current
volumes and costs
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e Assess the current levels and historical levels, including average
values and levels of branch errors
e Document alternative payment methods such as Debit Card
payment for goods purchased such as MVL discs, bill payments
e Asses the impact of change on Client contracts
e Assess the impact of change on the EDS contract
e Assess the feasibility of cheque writing at the counters for any
remaining products. This is to include all advantages of printing
cheques not just elimination of errors, such as the potential to
capture transactional and/or customer details data on reverse of the
cheque to aid recovery of unpaid cheque debt
e Consider the alternatives to current EDS clearing process
e Assess the full consideration as to whether alternative proposals
will close down fraud issues or transfer the issue to remaining
business processes
e Assess the impact on banking industry changes
e Document current, historical and potential future levels of Bank
charges
e Document the current and historical levels of EDS charges
e Assess feasibility of data capture [MICR line or imaging] at POS.
This could lead us to automating the icons on Horizon to stop
personal banking being encashed against the wrong bank
« Assess whether we could or should consider charging for
cheque acceptance. This might deter usage, but also enable us to
cover our costs
e Make recommendations for improving in branch competencies
e Make recommendations for improving in branch controls
e Make recommendations for improve communications
e Make recommendations for how POL could carry out
enforcement of any continued non-compliance for cheque
acceptance, e.g. contractual 3 months notice of persistent
offenders
e Assessment of personal banking transactions and the impacts
on back end systems and processes
e Assess the products we make cheque payments for over the
Post Office Counter
e¢ Document potential alternative for making payments including
costs and benefits
e Assess the products we make cheque payments for at Cash
Centres, including volumes and costs
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e Assess the business implications of the cessation of cheque
issuing from our cash centres
What is the HLBP Forum being asked to approve?
I Approval fora Feasibility Study I
Operational efficiency, working closely with P&BA, will take the lead
on this feasibility.
2 suitably skilled business analysts are requested to work full time
on the production of the feasibility report and the HLBP forum is
requested to endorse this resource request.
6. CHANNELS IMPACTED
Channel Details
Internet Yes
Contact Yes
Centres
Crown Office Yes
Commercial Yes
Agents
Community Yes
Agents
It should be noted that the following stakeholders will be consulted
during the production of the feasibility report:-
e RM Group — Martin Humphries — Regulation, legal
services, (Claire Wardle)
Royal Mail
ParcelForce
Marketing — Client managers, RAPID
lan Sadler - POL Payment Policy
Finance — including P&BA and audit
Outlet support (including network and training team)
Operations (change IS)
e Kevin Gilliland’s team — agency business development eg NFSP
liason
e Supply chain
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Ops control — commercial manager — EDS
Security
External PR
Internal comms
Sales (MI)
7. TIMESCALE
Feasibility to be completed February 2008 through to September
2008.
8. KNOWN CONSTRAINTS AND RISKS
e Social network responsibility. Can we / can’t we do anything
significant from a political point of view?
Impact on sister businesses of change
Impact on clients and client contracts
Potential loss of customers
Notice period of any change
Current banking legislation
Regulatory requirements
Legal requirements
Financial markets view on the long-term use of cheques
Liquidity, i.e. the costs of delays in clearing
HNGX development restrictions
9. FINANCIAL CASE
£100k budget has been requested by Ops Efficiency Programme
for 2008/09 to undertake this feasibility and any minor resulting
system change costs. P&BA have requested activities to be
completed for cheque initiatives during 2008/09. It is unclear if
there has been budget provision agreed for the P&BA activities.
The feasibility may require external benchmarking costs and the
use of bought in financial specialists to take this forward. This is to
be assessed in the initial scoping phase for feasibility report
production. If this is proven to be required, a business case will be
produced.
The feasibility will provide the estimated costs of any business
and/or system change.
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It is also important to note that recent changes in the banking
industry means that POL could be exposed by £27m loss due to
“Certainty of Fate Funds” risk. POL accepts c. £9bn of cheques
each year, with c. £100m being returned unpaid. Only 73% of
cheques accepted in branches are adhering to the timescales. It is
therefore imperative that we have identified all possible ways of
reducing this risk.
The feasibility will also provide the benefits that maybe possible
such as:-
Reduction in EDS costs
Reduction Bank charges
Reduction in P&BA staff costs
Reduction in error levels/write offs/Transaction Corrections
Reduction in fraud levels
Reduction in NBSC costs
e Potential reduction in Crown Office staff hours due to simplified
branch processes
e Any potential impacts on Subpostmaster remuneration
e¢ POL’s reputation with clients (intangible)
the following s
Please However, £100k
Has Funding No +I I provide has been
provision been details requested by Ops
made within this Efficiency for
year’s budget? 08/09
wae Please Not
Additional Revenue . -
Expenditure? No ~I I provide Applicable
: ___I details
wae . Please Not
Additional Capital . -
Expenditure?” No yI I provide Applicable
: ~ I details
Additional Income? Please Not -
No ~I I provide Applicable
~~ I details
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Will costs be Please Not
recovered from3™ No ~I I provide Applicable
parties (clients)? ~ I details
Please The financial
Yes ~II provide I benefits will not be
Are there any
impacts if this
change is not
delivered?
details
achieved and we do
not mitigate our
substantial financial
risks.
We do not move our
business forward
and significantly
threatens Ops
Efficiency 5to11
targets
10. IT STRATEGY IMPACT (To be completed in conjunction with
the Business Solutions Manager)
Has this a been reviewed against the IT strategy?
No Ba
Post Office Ltd
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High Level Blueprint Forum Assessment -
06/02/08
Yes I No I N/A I Detail
HLBP has v
Strategic Fit
HLBP has IT Strategy Fit v
HLBP has Finance Authorisation v
HLBP has Forum Authorisation v
HLBP requires IRF decision v
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Feasibility I Pilot/Tria I PACE PLC
Other
Forum
authorisation for
HLBP to
v
C&IS Resource required
Feasibility
Delivery
Resource
Business Solutions Manager only
Supplier / external resource for Feasibility
Study
Business Analyst
Project Manager
Business Change Manager
DA
Testing
PMO
Programme Manager
External specialist resource (please
specify)
Additional Forum Notes
+ Sukhi Kaur to invite Ann Clarke to a scoping meeting to discuss
P&BA cheque activities e.g. Faster Payments.
« Analyst resource is an issue for this activity to be identified via
the workshop.
+ Engage Steve Simms, supply chain.
+ Engage Richard Poulton, Ops Control.
Post Office Ltd
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+ Consider the impact on official mail budget costs.
+ Engage Saunder Narayan, Design Authority.
+ Engage Warren Dare, BSM Sales, over web impacts.
+ Note: WHS Travel Kiosks do not accept cheques currently.
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