Rapidly evolving technology can add to the pressures banks face today. Institutions willing to think about technology in new ways, however, will find it also offers opportunities and solutions. At Enterprise Bank & Trust, a $3.3 billion St. Louis-based commercial bank, this type of thinking has led to some progressive strategies, such as moving some basic IT functions off the bank's servers and onto the cloud as well as applying software development methods that typically are found only in much larger institutions.
[Strategic considerations beyond cost are driving more banks to adopt the cloud platform, according to Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016]
Enterprise Bank was founded 25 years ago to serve the lifetime financial needs of privately held businesses, their owners' families, and other success-minded individuals. This focus on providing high-touch services for entrepreneurial clients helped create a culture that is willing to embrace technology and use it to differentiate the institution.
For example, even in its earliest days Enterprise Bank always operated its own internal technology development team. This "build it, rather than buy it" mindset led the bank to develop its own proprietary loan processing platform, a number of online services, and a proprietary treasury management services portal. Originally designed to respond to one prospective client's needs, the portal has since attracted more than 100 additional clients.
Jon Rigsby, Enterprise Bank Senior Vice President, indicates, "We don't believe we can rely solely on the traditional vendor model to innovate and help us differentiate ourselves from the competition."
Using the Cloud to Simplify and Streamline
As Enterprise Bank grew, its technology team had to allocate its limited resources to balance product development for services and internal efficiency projects with ongoing system administration. The bank made a strategic decision to begin offloading functions that consume IT resources but do not differentiate the bank from its competitors.
One of the first iterations of this strategy involved replacing the bank's aging Lotus Notes-based commercial loan origination system. The development team realized significant benefits could be achieved by adopting the platform-as-a-service product Force.com, from Salesforce.com. The platform allows the bank to quickly create a full array of integrated workflow applications, while all the routine system administration tasks are hosted in the cloud. This new platform was launched in June 2011 and is continually enhanced.
The same approach applied in early 2012 when replacing the bank's locally managed Lotus Notes email platform by moving its email and calendaring functions onto a secure cloud platform. By relieving the IT team of administrative duties such as managing email, virus protection, document archiving, and software upgrades, the bank was able to free up limited IT resources to focus on areas that add value to the customer.
"As we look at future trends, we believe to be more effective at innovating we need to align ourselves with innovative companies, like Salesforce.com," says Rigsby.
The bank is now implementing the Salesforce.com Sales Cloud as its enterprisewide customer relationship management (CRM) platform, gaining immediate benefits from integration to the already familiar Force.com workflow processes. Today, the Sales Cloud is licensed across the entire organization, from front-line teller to CEO, and the various applications and disparate systems are brought together onto a single platform.
While the core banking system remains the master source of all data, the bank's business processes are built on Force.com. Even document imaging is accessible from the Force.com interface. What's more, every activity on a customer account is automatically updated systemwide, providing immediate, up-to-date access for all customer-facing and back-office personnel.
According to Rigsby, "The traditional bank processing model, where everything surrounds the core processing system, is antiquated. Our vision is to have every aspect of Enterprise's business managed through Force.com, either directly or through integration. The core simply becomes a plug-in accessory -- a 'big calculator.'"
Evaluating the business needs of the organization and the suitability of technology to meet those needs is an important management activity at Enterprise Bank. Consultant Crowe Horwath LLP has assisted with this ongoing evaluation.
Adding Value Through Agile Thinking
In addition to moving functions to the cloud, Enterprise Bank also builds on its IT resources by using development methods originally used in the manufacturing sector, such as value stream mapping and other lean production tools, along with agile software development techniques.
Using these techniques, Enterprise Bank has been able to accelerate product development and identify earlier in the cycle opportunities for improvement. For example, value stream mapping early in the development cycle helps identify waste in the process and suggests improvements in process flow prior to developing the software. Agile methods, including the scrum technique for organizing software development, allow the team to generate iterative improvements through small incremental changes -- an important advantage in a fast-changing environment.
By shifting its IT team's focus from maintaining systems to delivering solutions, Enterprise Bank has benefited from faster innovation and automation of workflow processes. With success has come the need for a more mature technology development process, replacing informal approaches with a governance process that is more structured but also more transparent and adaptive. Crowe provided advice and assistance in designing and implementing this technology governance approach. Individual lines of business are now responsible for developing the business case for new products or enhancements they desire, and an organizationwide steering committee prioritizes projects.
Information security is paramount for all activities, and all new initiatives undergo an exhaustive due diligence process. Full transparency extends to the critical areas of risk management and compliance. Auditors and examiners are kept fully informed of new technologies being adopted, impending system changes, and potential new products.
For such an approach to work in other institutions, senior management support is essential, as is a progressive corporate culture and a willingness to use a disciplined, collaborative, and, at times, nontraditional approach.
Banks that are able to create and sustain such an environment will find that today's rapidly evolving technology does not merely present challenges, it also offers real opportunities for differentiation and efficiency.
Jason Bomers is a principal with Crowe Horwath LLP in the Grand Rapids, Mich., office. He can be reached at firstname.lastname@example.org.Tim Reimink is with Crowe in the Grand Rapids office. He can be reached at email@example.com.