Survival Of The Fittest Bank: A Road Map To Simplicity

At its core, banking is a simple concept.  But in action, banking is one of the most complex industries in the world.  This complexity was both a cause and symptom of the recent global financial  Survival Of The Fittest Bank: A Road Map To Simplicitycrisis.  Opaque, intricate systems led to an unstable banking system, while the regulation imposed in the wake of the crisis added an additional layer of complexity.

Today, most banking firms are focused on maximizing revenue from their most profitable customers.  But at the same time, they also need to attract the younger generation that will soon become their customer base.

The future of banking will be determined by the customer

To attract the next-generation audience means embracing the new products, services and capabilities they demand.  Unfortunately, this can add yet another layer of complexity as legacy technology systems make it very difficult for banks to launch new products and services.

In fact, the average time to launch a new product is 9 to 12 months due to the burdensome nature of identifying requirements, development, programing, and testing outdated systems.

New, innovative platforms, however, use configuration instead of development, which makes them simpler and faster to launch into the market.  For example, if a bank wants to create and introduce an all new Money Market Account (MMA), one no longer needs to start from scratch.  The solution is as simple as starting with an existing MMA and modifying it by adding features as attributes.

Many customers, specifically Millennials, expect a consistent, seamless experience across all platforms and devices.  This experience is what we call omni-channel.  Amazon is one company that’s getting that right.  Amazon Prime customers are able to order a movie one night, and finish watching it another – from any device.  Another example is the buying experience. If their customers don’t immediately purchase an item in their shopping cart, that item remains in their shopping cart, no matter what device they search the site on.

Ultimately, this is what banks need to be able to provide their customers – a robust, omni-channel experience that allows them to start and finish any transaction on any channel or device – all in a consistent, seamless fashion.  For example, if a customer starts a mortgage application online and half way through it wants to speak with a mortgage loan officer, he should not have to start all over again.  He should be able to pick right up where he left off while sitting in front of the loan officer.  This is the customer experience that modern technology is providing consumers in so many industries – and the expectations are that banks do the same.

Fortunately, there are actions that can be taken right now to improve customer experience and facilitate an omnichannel experience without replacing a bank’s entire core platform.  With the proper end-to-end customer experience solutions it’s possible to provide customers a rich and seamless experience across all channels.  Additionally, the bank will be able to identify and reach customers at every touch point, which allows for intelligent cross-selling – the right product/service, on the right channel, and at the right time.

What’s more, cloud computing can help make these improvements quickly by reducing the development and IT time required with fewer internal bank resources.

Solve short-term problems, but plan for the future

Improving business today will help keep banking institutions relevant tomorrow.  But to keep from playing catch-up with competitors, banks must continuously look (and plan) 5 to 7 years ahead.

The future looks bright for banking firms that have gone through the road-mapping process.  It is important that a bank has a 5 to 7 year road map for core transformation – but it is also critical to understand what improvements must be made to enhance the customer experience.  As an example, with 13 million customers, Commonwealth Bank of Australia (CBA) is one of the world’s top 10 banks.

It recently underwent a complete core transformation that produced incredible results:

  • CBA is now able to bring new products to market 75% faster than before.
  • It reduced customer queries by 15%.
  • CBA reduced branch network processing errors by 30%.
  • In the first 3 years of implementation, it saved $ 205 million of a $ 250 million 5-year goal.

How would your bottom line look with the improvements shown above?  CBA and SAP together developed a long-range roadmap, as well as found the “quick hits” that could be implemented along the way.  This strategy was critical to the success for Commonwealth Bank, and it could be for your firm, too.

Learn how banking can Run Simple in 2015.

Recommended article: Chomsky: We Are All – Fill in the Blank.
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Innovation » future of business