Across the financial services industry, companies are redirecting their focus from survival to growth. In a recent Ernst & Young survey, "Competing for growth: Winning in the new economy," more than half of the respondents identified a rapid response to market changes as the most critical factor in being competitive. The agility of an organization's technology will play an important role in achieving its growth targets and gaining a competitive edge.
For most financial services companies, two years of spending constraints and staffing reductions have had a negative impact on the flexibility of the technology environment and diminished IT's ability to deliver change in a reliable and repeatable fashion. Creating a platform that enables growth (e.g., expanding product portfolios or executing strategic mergers and acquisitions) will require a transformation program to make infrastructure and applications more nimble and capable of effectively supporting a dynamic business agenda. The program must address three foundational issues:
1. Streamlining data management. Organizations now rely to a greater degree on market and customer data to tailor new or existing products, make more intelligent business decisions and react rapidly to changing market conditions. Furthermore, the information they deliver to customers must be up-to-date, consistent and accessible. Customers expect their service provider to understand the full scope of their relationship. For example, if they communicate a change in their information in relation to one product, the same information should be updated for other products.
To achieve a customer-centric view of enterprise data, IT departments must invest in master data management. New architectures must integrate data stores and standardize information within and across the enterprise. To maintain integrity throughout the information life cycle, data management and governance policies must be clearly defined and executed.
2. Integrating customer channels. With the advent of social media, Web 2.0 and mashups, customers expect products to be delivered via non-traditional channels, including mobile devices, voicemail, email, web and chat.
Providing consistent quality across multiple channels is a complex task that places new demands on the infrastructure and application portfolio. It is important to eliminate redundant systems and separate business processes from delivery channels. This requires that IT adopt and use open application program interfaces and standards-based protocols to support flexibility in developing and deploying web services and data. Business process management should be used to streamline front-to-back business workflows and supporting processes.
3. Enhancing operational agility. With the anticipated innovation in financial service products, businesses must be able to react quickly or risk losing opportunities and market share. Rapid response in information product development and delivery requires IT to perform quickly and efficiently.
But, the fastest response is not necessarily the most efficient. Delivering and supporting a portfolio of stable products requires strict process discipline. By adopting service standards and composite service delivery methods, organizations can rapidly segregate, recompose and host new capabilities. Effective reuse and reassembly of services into functional applications requires mature development, testing, release and change management processes to maintain service quality.
An ambitious transformation agenda requires a true partnership between IT and business leadership. All parties must share a common vision and openly communicate the risks, challenges, and benefits to stakeholders. Success in this effort will require:
Gaining an edge in the post-crisis market will require a new level of agility and stability. At the same time, making the right investments today will leave companies better prepared to respond to the unknown challenges and opportunities of tomorrow. Forward-looking financial services companies will assess and transform their underlying architecture and process landscapes in order to advance their growth agenda.
Bob Reinhold is a principal in the Financial Services Office of Ernst & Young LLP. The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.