Understanding new opportunities for end-to-end business value
Across the financial industry, innovation is driving new and exciting ways to bank. For banks and credit unions, remaining competitive requires a balance in responding to, and predicting, customer needs and achieving key performance measures.
Focus on classic performance measures such as return on equity (RoE) and return on assets (RoA) are now complemented with changing regulator-driven measurements, such as delivering minimum capital and liquidity ratios and – for some – complying with new resolvability requirements. In this complex world, the room for error is smaller than ever.
Since 2000, the Federal Deposit Insurance Corporation (FDIC) lists over 550 financial institutions that have failed to navigate successfully. It is more important than ever to evaluate the end-to-end business requirements to extract value from innovation and drive results.
Progress has added complexity
For many leaders, seeking new end-to-end business value is challenging. Finding a view across the business involves a lot of work and “connecting the dots” across a disparate infrastructure and departments. Many core banking systems date back to the 1980s. These legacy systems have then been integrated with new technology to support product introductions, service features, and compliance requirements. During these technology upgrades, end-to-end visibility is often not a primary priority and incremental complexity is added. When you consider departmental silos and regional processes, the challenge only increases. In seeking an end-to-end view, leaders are often faced with tedious manual processes to pull together the big picture in a dashboard view.
Support collaborative value—from end to end
To reduce the time and effort required to pull together the end-to-end view, some leaders may initiate projects to integrate systems. These projects attempt to streamline processes and improve data transparency and are rarely simple. They often can be inefficient or ineffective as subsequent or even adjacent projects may quickly add new requirements back into the process.
Just because they are difficult does not mean it should not be done. To ensure the projects are successful, banks and credit unions can adopt a corporate data-ecosystem standard. This standard includes a long-term end-to-end data-transparency framework and guidelines for departmental programs to link into this broader, collaborative vision. The long-term framework needs to be flexible enough for innovation to proceed in parallel to its implementation. which will often be over many years. Providing guidelines for new programs to integrate into the new model, future-proofs the solution and makes end-to-end visibility both a standard project priority, but also a core competency of the organization through repetition.
As the new framework is being implemented leaders can support a culture of collaboration, united by strategic shared goals to bring new ‘value-creating’ opportunities to the organization. Leveraging collaboration supports value creation by simplifying access to, and the time required to pull together the big picture. This is particularly valuable in bridging the gap between IT and Marketing. You can read more on bridging this gap here.
Gain better visibility into costs and options for controlling them
It doesn’t take long to gain valuable insights after enabling a end-to-end data transparency. Shifting the focus to the big pictures across the business provides leaders with a new lens to evaluate their business and find value-creating opportunities. Often the first opportunities they identify are related to cost.
Focusing in on and creating better visibility into costs seems obvious but is often misapplied. According to Ernst & Young, banks often “find themselves focused on the academic exercise of cost accounting and allocation rather than an objective of controlling or reducing cost.”
EY suggests banks can achieve sustainable cost leadership by overcoming three challenges:
- Identifying stubborn costs that banks incur to continue with a legacy way of doing business that could be changed through the adoption of the latest technologies, methods or standards.
- Avoiding myopic cost-cutting initiatives which deliver on short-term reduction targets. These myopic costs cuts can be difficult to track back to the bottom line, file to retain their impact over time, and can often re-occur with the increase of business volumes.
- Managing stranded costs which would continue to be incurred after discontinuing a product or function.
As costs are identified and categorized, options to control them can be better assessed through scenario planning. This approach leverages an end-to-end understanding of business and collaboration. Thus avoiding cost shifting through the implementation.
Boost customer service thanks to improved communication and tracked behaviors
Improved communication and data accessibility offer opportunities to boost customer service. Customer behavior, when tracked across systems and departments, offers deeper insights into the customer journey and customer needs. With these insights, banks and credit unions can respond with more meaningful and personalized services and solutions.
As technology improves so does real-time data feedback on customer behaviors. In the hands’ marketers, this real-time data can be used to create custom solutions and personalized offers by tracking and predicting trends. In the hands of bankers, advisors, and customer service agents this data makes the difference from providing good service to great service. Great service builds brand loyalty and creates champions out of customers.
Improve customer experience through Artificial Intelligence
Future opportunities are enabled to supplement customer service through artificial intelligence (AI). The opportunity of AI goes beyond the service bot, with applications to improve self-service and adapt agent interactions. Each solution designed to meet the personalized needs of each individual customer through simple interfaces which harness the power of “big data“, removing time, cost and inefficiencies.
Creating visibility into the end-to-end business provides banks and credit unions opportunities to extract value now, but also enables them to insulate from future economic shocks. Access to historic and real-time information enables better analysis and forecasting while enhanced, technology-supported scenario planning can be implemented on demand. What are the top opportunities you see when you look at the big picture? Share your thoughts by getting in touch at firstname.lastname@example.org.