Banks’ 2013 agendas are much clearer now than in years past, led by external regulatory pressures and banking competition from a landscape heavily populated with products and services offered via multiple channels. Bankers are at a critical juncture between responding to regulatory measures that are prompting significant infrastructure changes and working to engage an increasingly savvy mobile customer base that has many choices. The top key priorities for banks in the year ahead include: ensuring compliance efforts meet regulatory compliance and reporting issues, and enabling customers to interact across multiple channels with the bank for a better customer experience and ultimately better retention rates. With the right focus, banks can tackle both, and here are several ideas worth considering in 2013:
Update Core Banking Systems: The typical core banking system is decades old and regulatory imperatives such as Basel III and CCAR reporting demand greater data availability, consistency, quality, and visibility across the bank than many core systems can provide. Banking institutions realize they need to make changes. The costs associated with system maintenance can be fairly expensive but implementing an entirely new system would require a substantial investment that a banking institution may not feel is feasible.
The solution is to gradually update a core banking system with the aim to center operations around the customer, placing the end-user at the heart of the platform. Modernized core systems can provide banks with faster and less costly ways to manage their operations. Research shows that if a bank can eliminate between fifty to one hundred percent of duplicated activities, it could reduce between seven to thirteen percent in total manufacturing and processing costs. Additionally, delivering banking services via multiple-channels is also a must now for attracting and retaining customers. As the customer base is transforming to one that is more mobile technology aware, a modernized core-banking system is a key enabler for a bank to take advantage of multiple banking channels such as web and mobile.
Re-architect Your CRM Systems to Address Mobile Conundrums: The smart phone explosion and easy access to payment apps have resulted in mobile payments usage at a rapid pace, with 17 billion mobile payments processed per year by 2017 according to Capgemini and RBS’ 2012 World Payments Report. Getting to know your customer better will start and end with the mobile device. Those without the tools or CRM systems to capture valuable insights from this channel to more effectively cater to customers’ needs and increase their satisfaction will face significant obstacles to success in the coming years.
Don’t Tolerate Silos as an Excuse for Ineffective Data Management: Industry consolidation and M&A will likely keep a breakneck pace over the coming year and both have created enormous challenges for institutions trying to align and make sense of the voluminous customer data coming through their doors. Institutions may very well have a multitude of data tools at their disposal to address the challenge but tools won’t generate beneficial outcomes such as knowing which branch location a customer most frequents unless banks leverage the true power of innovative technologies such as Big Data and make analytics a core focus for effective business decision making.
More importantly, efficient data management and analytics will support the C-suite. Senior leadership is feeling pressure for increased regulatory requirements from entities such as the U.S. Federal Reserve Board (FRB) for information and data management to support risk and compliance reporting. Institutionalizing Data Governance and ascertaining the quality of data is also becoming paramount for banks led by reputational, regulatory and risk management mandates. Organizations need now, more than ever, specified stakeholders and leaders for driving a data management initiative such as a Chief Data Officer to establish, manage and support reporting of institutional data in the most cost effective, transparent and efficient ways possible.
Investing in Customer Master Data: The silo breakdown also points to a need for investing in customer master data. By aggregating customer data across products and services, customers will be the true beneficiaries. Having a single view of the customer is the catalyst needed for increasing the level of customization banks can deliver through numerous channels such as mobile or online.
These considerations might be viewed as significant undertakings but banks must bring operational efficiencies to the forefront and improve availability of information to enable bank management to make better decisions. Doing so will not only directly or indirectly improve customer satisfaction and meet regulatory demands, but will also adapt to the changing technology, product and services landscape in the process.
Joyj Mathew is Global Practice Leader of Enterprise Information Management & Strategy Consulting and Jim Washburn is Global Practice Leader of Core Banking at Capgemini Financial Services.