As in past down cycles in the financial services industry, there are always winners and losers. The winners are those who are market-responsive. They focus -- in good times and bad -- on a few key strategic objectives and executions. These institutions also make sure there is alignment of financial, customer, and operational and risk management initiatives with strategy and value creation. Often that means utilizing balanced scorecards and business intelligence (BI) tools to create performance measures that provide both historical perspective -- "How did we do versus targets and goals?" -- and forward-looking analysis -- "What do we need to change to be successful in the future?"
Why is this so important? Since banks are siloed organizations, there is not always a shared understanding or prioritization of initiatives. Often this results in the pursuit of too many initiatives with no clear line to strategy and suboptimal utilization of resources (i.e., people, capital and technology). Given the complex technology environments in most banks that include a mix of legacy mainframe transaction systems with Web-enabled business applications, understanding cause and effect is critical to creating and maintaining a competitive, market-responsive advantage.
Benefits include an improved understanding of customer needs and preferences; product, customer and relationship profitability; and, ultimately, impact on the bank's strategy and performance. BI also allows for modeling the effects of market changes, competitor responses and regulatory requirements. Clearly, the result is more-efficient deployment of people, capital and technology, as well as being better positioned to continuously develop new and potentially innovative products.