As Bank Systems & Technology rolls out our 2013 Elite 8 award honorees this week, we acknowledge innovative work done by bank technology executives over the past year or so. But the work of a CIO is never done; in today's rapidly changing landscape the bleeding-edge technology of today could be commonplace six months from now. And CIOs may be tackling problems they don't even know exist at this point. So, what might be some of the projects our 2014 Elite 8 honorees will be working to solve? We asked a panel of industry experts to the question: What will be the biggest challenge facing bank CIOs over the next year?
Dealing with the Complexity of Data
David Albertazzi, Senior Analyst, Aite Group
While bank CIOs will deal with many challenges in the coming year as they face ever more complex organizations with vast and growing needs, one particular technological challenge raises to the top: Dealing with the complexity of data. The massive explosion in data is creating unprecedented manageability issues for banks around the world that can be linked to the following factors:
-- Expanding customer touch-points with the rapid growth of mobile, other wireless devices and digital bank channels.
-- Emerging types of both structured and unstructured data associated with new customer engagement platforms and social media content.
-- Real-time data processing and analysis necessary to provide timely insights to improve decision making, customer experience and expectations.
-- Rising data security concerns that continue to plague banks, both internal with the emerging challenge of Bring-Your-Own-Device, and external with mitigation of security breaches, malware attacks, service interruptions, and loss or theft of customer data.
Meeting these data-volume challenges can be costly: Legacy core banking systems involving multiple data warehouses and various transactional systems add up to a high total cost of ownership and require constant need for integration and interoperability. Increased regulations and compliance involving the tracking of financial transactions and customer data have augmented the responsibility of banks so that they must maintain the data, its accessibility and provide greater transparency to the regulators.
Implementing effective data access and management standards coupled with a nimble infrastructure architected around new delivery models such as cloud computing and using emerging technologies like Hadoop to leverage the power of unstructured data will be critical components in the arsenal of bank CIOs. With such imperatives in place, banks will be able to shift their focus from dealing with the complexity of data analysis, governance and distribution, to actually harnessing the data and using it to their advantage.
Innovation the Key
Jacob Jegher, Research Director, Celent
Bank CIOs and technology executives face all kinds of challenges. Every technology executive in the banking industry should focus on turning these challenges into opportunities. The key is to innovate on all fronts. Innovation can be both internal (e.g., finding creative ways to maximize a budget) and external (e.g., providing new and exciting tools to customers). Bank CIOs and other executives need to build a cohesive approach to innovation management. It's important to determine who is responsible for innovation in the enterprise and make sure that a culture of innovation permeates from the top down to the front line staff. Innovation can also take on a bottom-up approach; motivated employees are creative employees. Employees from across the bank should be contributing to new product and business ideas. It's a huge challenge to create that culture and emphasize innovation in a constrained environment. Throw legal requirements, compliance, and security into the picture, and it becomes especially difficult to blend innovation into day-to-day activities.
Frankly, technology executives have no choice but to emphasize innovation. This is particularly relevant for digital channels, because customer expectations are being set outside the banking world. Online and mobile banking used to be viewed as alternative channels. This is clearly no longer the case. Digital channels are critical for customers and for financial institutions. Adoption of online and mobile banking has grown steadily, but there is plenty of room for improvement. It's all about creating value for the customer and seeking win-win scenarios. Banks have to move from providing basic transaction engines to offering value-driven interactive solutions.
Achieving Outstanding Customer Service
Ed O'Brien, Director, Banking Channels Advisory Service, Mercator
As most banks are in the midst of strategy planning season, now would be a good time to take a look at the most vexing challenges in the coming year. At the top of the list is a need to extend their reach beyond DDA accounts to all accounts — and all customers and lines of business — beyond traditional core banking and multichannel systems toward a more holistic omnichannel infrastructure.
This new view of banking is needed because today's banks are looking to extend their capabilities beyond traditional mainframe-based core systems with a primary mission of managing checking and savings transactions, and integrating core operations more deeply with their other financial and back-office systems. Among the bank-led initiatives are projects to tie together various legacy systems that have evolved over the years as part of organic growth or mergers and acquisitions.
These organizations, as well as their FI customers, are also working toward greater integration of their systems and other channels, marketing, customer relationship management (CRM), back office, and analytics systems toward something called omnichannel banking.
Although the desire to offer outstanding customer service is central to most banks' mission statements, the ability to execute on such plans has been limited. Only recently has the underlying technology of banking systems begun to enable truly interconnected systems.
Furthermore, many of the large core system providers are in the process of planning or implementing enhancements to their solutions to increase their interoperability with various customer accounts and back-office systems to improve overall customer experience.
To execute on this new, omnichannel banking paradigm, many banks are thoroughly evaluating their processes and systems and seeking new methods to better understand and connect with customers. This evaluation usually requires a thorough review of the way the FI's core, channel, CRM, and back-office systems work before the institution can determine how to make them work together more effectively and efficiently provide a 360-degree, real-time view of the customer.
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio