March 15, 2012

Despite a tumultuous decade, commercial banking remains one of the most important, growing sectors in the global economy, with tens of millions worldwide just starting to take advantage of financial services. Meanwhile, as global financial services have evolved to be largely dependent on electronic transactions and records, the role of IT is instrumental in banking operations. Generally, banks can achieve expansion through organic means or through acquisitions, but growth introduces scalability challenges for data and communications. Given the increasingly stringent capital requirements in the industry, as well as competition, this growth opportunity for global and regional banks requires efficiently expanding banking operations.

Branching Out

Investing in more local branch locations is critical in introducing financial services and capturing market share. So how do banks cost effectively expand their branch footprint?

From an IT perspective, taking advantage of virtualization and consolidated data centers can minimize the IT footprint in far-flung branches, reduce the cost of managing applications and infrastructure, and simplify business continuity planning. IT resources can be centrally managed and provisioned, while users access applications and files over the network. However, network communications have their own limitations, such as bandwidth capacity and the inefficient manner in which many applications operate, which becomes exacerbated by latency over long distances. As tellers and bankers are delayed by slowly responding customer relationship management (CRM), office and email applications, lines of frustrated customers are growing. This isn’t the impression banks can afford to make as they enter new markets and compete against established local operators or reluctant adopters of banking services.

The challenges of network latency are very real, but neither installing additional local servers at each branch nor investing in additional bandwidth is necessary. Optimizing existing wide area networks (WANs) can make more efficient use of bandwidth and accelerate application performance. As BankWest sought to expand its retail banking across three time zones in Australia, the company deployed WAN optimization appliances to improve application performance and reduce bandwidth utilization. Meanwhile, consolidating any applications that need to remain in the branch onto a single server can further simplify management. This allows banks to keep the costs of branch operations low while still inspiring the kind of confidence needed to attract customers. Looking forward, as tellers quickly serve customers and resolve their concerns, they are in a better position to promote additional banking services, driving the next leg of growth for consumer-oriented banks.