Achieving speed to market can provide banks with a competitive advantage. But they need flexible technology infrastructures to achieve speed-to-market strategies, and launching products just for the sake of offering something new won't win banks new business.
Brian Edwards, Senior Vice President, Astoria Federal (Lake Success, N.Y.)
Ravi Manchi, Managing Director, MPI Professionals (New York)
Dennis Rygwalski, GM, Banking Solutions Group, Exigen Group (San Francisco)
Dan Shannon, VP and GM, Metavante Consulting & Professional Services (Milwaukee)
Q. What does "speed to market" mean in banking and what are the benefits for banks that realize the goal?
Brian Edwards, Astoria Federal: Speed to market is how quickly you can differentiate your company by providing an innovative or value-added product for a targeted customer segment. A major benefit is increased profitability through greater efficiency or revenue. If you're launching something just for the sake of launching something, without any real, true, intrinsic value to customers, they're not going to reward you with their business. So you have to keep your eye on the benefits of acquiring a new relationship cost efficiently, as well as strengthening a relationship or deepening a relationship through increased revenue.
Ravi Manchi, MPI Professionals: Speed to market is the ability and agility of a bank to either launch a particular product or service offering and/or pull out of a particular market segment. Firms that are able to quickly read the customer/market needs have a potential to increase their market share within a certain segment and, ultimately, increase overall revenues. Of course, with a drive to implement a speed-to-market strategy, banks should ensure that they do not compromise their long-term strategies.
Dennis Rygwalski, Exigen Group: What keeps most financial services CEOs and CIOs up late at night - aside from data protection, security and compliance - is their ability to launch new business initiatives that will help maintain and/or increase their market share. Many CEOs view technology as a competitive weapon that will enable speed to market. However, CIOs are challenged to build an agile and flexible IT infrastructure that facilitates new business initiatives and leverages existing product lines. The ability to quickly create and/or adapt processes, systems and personnel to build competitive advantage - that's speed to market, and it means gaining competitive advantage, increased market share and earnings per share.
Dan Shannon, Metavante: Speed to market is anticipating your customers' needs and providing products and services that will meet, or ideally exceed, those needs. Banks that continuously introduce new products that surprise and delight their customers use speed to market to create a competitive advantage. The benefits include reduced customer attrition, increased customer retention and higher customer loyalty - which results in a bottom line benefit to the bank in both higher revenue growth and lower expenses.
Q. Are banks actually achieving speed to market? What are the challenges to realizing a successful speed-to-market strategy?
Manchi, MPI Professionals: As a whole, the industry fares quite poorly in this regard. Very few banks truly are in a position to achieve speed-to-market strategies. Institutions that make their core operations more effective and less expensive to run, and are able to maximize overall efficiencies, are in a position to increase their bottom line and pursue speed-to-market strategies.
Rygwalski, Exigen Group: Most banks haven't made significant strides in this area. Banks continue to build their technology and processes around product and line-of-business silos. For example, the mortgage area needs to improve the time and reduce the cost to originate new loans - banks may get a new mortgage origination package, but it doesn't work for consumer loans, second mortgages or small business. Banks don't leverage new technology-enabled business processes across lines of business from an enterprise perspective. This is a barrier to speed to market for new business initiatives. Banks must have a flexible and agile technology backbone that they can configure quickly across lines of business and products, while adapting the processes required to bring new products to market quickly.
Shannon, Metavante: Banks increasingly have invested in improved processes and technology automation. Many banks are on the forefront of offering innovative new products and services to their clients. Recent examples include health savings accounts, debit cards, payroll cards and increased self-service capabilities through Internet channels. The key factor is to correctly align the bank's business objectives with its enabling technologies to quickly offer new, streamlined and cost-effective products and services.
Q. How can banks achieve speed to market and create products and services that are profitable?
Edwards, Astoria Federal: The most important thing is a solid base of information. You need to have a single, specific, integrated and consistent view of your customers and their behaviors, as opposed to trying to have to accumulate information from different information silos, in order to make good decisions. For example, a lot of banks talk about profitability - but, is profitability averaged or is it based on individual customer profitability? And, how are you further segmenting that profitability information according to customer behaviors?
Another part of speed to market is people. Technology is good, but the people and the process behind the people can easily destroy the value that good technology provides. Many banks tend to race toward getting technology to market when they haven't thoroughly thought through the people and process perspectives.
Manchi, MPI Professionals: It's extremely important for banks not to lose focus on their core products and services. Banks, while keeping an eye on long-term strategies, should continuously evaluate and prioritize product and service offerings that are profitable, are not too far away from their core and can be swiftly launched into market.
Rygwalski, Exigen Group: Speed to market is about launching business initiatives that have to stand on their own and generate profitability. Banks should look at these as investments as if they were venture capitalists. That kind of rigor around the business case - as well as product fit and customer acceptance, with buy in from all of the stakeholders - will reduce the number of hurdles that companies face and will align the product emissaries, and hopefully their vendors, along the same path.
Shannon, Metavante: Banks that have not updated their technology platforms and hired innovative people, or that have old, outdated business processes, must invest in corrective action or they will continue to see declining revenue growth, higher operating expenses and increased customer attrition. The key for banks is to understand their customers and anticipate their needs throughout the various stages of their life cycles.
Q. What technologies and strategies can banks employ to gain flexibility and improve speed to market?
Manchi, MPI Professionals: Banks should leverage current regulatory compliance initiatives and other related internal drivers to make the most out of the data collected. They should specifically design and develop databases to take advantage of MIS capabilities; functionality should address the business intelligence aspects of customers, segments, product/service profitability and ever-increasing regulatory compliance requirements.
Rygwalski, Exigen Group: CIOs and business executives need to leverage information and best practices across lines of business and employ modern technology to facilitate this. It's a question of how to leverage existing systems with new technologies like BPM to facilitate new business initiatives and speed to market. BPM is simply software and integration services. Business process optimization is what banks really need. This means aligning people, processes and IT to maximize financial return.
Shannon, Metavante: Banks today must have flexible, integrated technology that can adapt quickly to improvements in their business processes. Banks' systems must support an open architecture such that new capabilities can be integrated quickly and easily into core deposit and loan systems. Savvy bankers leverage third-party solutions, outsourcing vendors and external partnerships to drive speed to market.
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