Tackling System Complexity in Banking – part I

From a purely IT environment point of view, complexity in banking can be a manifestation of multiple factors – legacy systems, disparate technologies, application & process redundancies and inadequate/inefficient integration. These factors can seriously undermine a bank’s efforts to embed versatility, flexibility and agility into their operating DNA. Simplification then becomes a foregone conclusion for banks that want to compete in today’s marketplace, defined by evolving customer needs, omnichannel distribution models, stringent compliance standards and technologically superior competition
Banks therefore need to adopt a three-pronged strategy of systems simplification that can help them cope with the demands of digital banking. The first step is to simplify distribution, one aspect of the banking business that has seen the most disruption over the years.
Over the past decade or so, banks have constantly added touchpoints to their distribution chain to stay aligned with customer lifestyles and preferences. But in a majority of cases, this has only resulted in the creation of multiple independent structures that serve each channel in isolation. That has amplified banks’ traditional product-centric approach, which is completely at cross-purposes with the requirements of a customer-centric world.
For banks attempting to create a ‘one bank’ strategy for success, the effort will have to begin by transitioning to a ‘one architecture’ approach to distribution. Unified channel architecture will empower banks with the agility to launch new channels quickly, the versatility to launch new products across all or any channel(s) and the flexibility to create bundled offers across segments and touchpoints. It also gives banks an aggregated cross-channel and -product view of customer relationships that can help drive more granular personalization. For customers, this translates into a richer, personalized and engaging experience across transactions, products and channels. Truly unified distribution, therefore, would be about delivering a consistent and personalized experience irrespective of transaction, product, channel or device.
There are two more areas in banking systems requiring simplification – process redundancy and spaghetti interfaces – which I shall address in the second part of this conversation.
By Sai Kumar Jayanty and Ravi Venkataratna

Make Business, Not Engineering

Most Indian IT companies have strategized, developed, branded, sold, implemented and established products & solutions catering to various industries and used by clients all over the world. Given the strength of Indian engineering skills, and good career options in that area, the Indian IT industry’s commitment to exploring and building products is not surprising.  While a few products go on to attain maturity and leadership, many others struggle to gain acceptance. The Banking and Financial sector is full of complex IT solutions for core banking, insurance, Asset Liability Management, prevention of money laundering, etc. Such products and solutions must be easily deployable, and have the right features meeting the needs of the target market.
In this case, product development is more challenging than say in the services industry, where the client provides the business requirements and IT is only responsible for development, punctuated by periodic validation and checking by the client. This is because here, IT must also have the business/market/technical understanding to build the right product or solution meeting global market requirements. Continuous research and development is required to enhance product features and usability in line with market demands and changing technology needs.
The product development is mostly seen as an engineering art rather than the skill of a business analyst who possesses comprehensive domain & market knowledge. The role of the business analyst is perceived as a support function compared to that of the core engineering team member who designs and develops the offering.
A few products have not penetrated the target market in spite of the best efforts; these may be branded as “engineering” rather than “business” products. Engineers develop lines of code based on a requirements analysis, to create functionality but not with necessary consumer connect.
It requires specialized skills to modify an engineering product into one with a “business” outlook. There might be a need to change the user interface, or incorporate business language and international terminologies. Sometimes changes cannot be effected because of technology constraints. As a result, even though the breadth of business functionality is available, users don’t adopt because of the unfriendly user interface or lack of navigability. The complexity increases manifold when more and more processes are logically added into the solution with defined workflows. Contacting the IT helpdesk or vendor for help with capturing data or finding the right business functions may not always be feasible.
A product is usually driven by architecture that would have been conceptualized a while ago. Hence any later developments would need to be designed within the existing framework. The lines of code are built within the framework, which will take priority over usability and other client considerations. When compared to a service industry requirement where development can be explored based on the latest architecture and technologies, the product industry is aligned to technological and architectural considerations, which were envisaged at the concept stage and development of business functionality is accommodated within the technology framework. It is also not prudent to redesign the architecture in a shorter span of time or develop new solutions on similar business lines.
The longevity and maturity of the product can be measured by its global coverage, integration and architectural flexibility, usability, roadmap and vision. All these factors are synonymous with a business offering rather than an engineering product.
To conclude, the IT industry should develop business products rather than engineering products by pooling expertise from multiple areas and focusing on the following:

  1. Business/functionality
  2. Usability and unified  user interface across multiple screens
  3. Technological/architectural flexibility
  4. Inbuilt business processes arranged logically and sequentially
  5. Interface/middleware architecture for ready plug and play
  6. Regulatory compliance
  7. Online help and easily understandable functions for business users
  8. Use of industry standard terminologies
  9. Easy to understand documentation and user manuals

Achieving this comprehensive product vision requires experienced business analysts with profound domain skills and sound technical knowledge. They can analyze the requirement and provide key inputs at various stages of the product life cycle. These should not only be restricted to business inputs that help in coding but also consider design, usability and testing. The product should be customer oriented and forward looking. Until that happens, IT vendors will continue to develop engineering products – functional but not necessarily user friendly – with a shorter shelf life and local, rather than global appeal. Both the IT industry and engineers should develop a broader vision with a business user perspective during product development. Expecting an engineer to be available as a business user at the front office responding to customer queries and interpreting the lines of codes (with limited knowledge available) built by another engineer may not be an ideal situation for the IT industry. The success of a product lies both in a strong engineering foundation to support current and future business functionality and a front end designed for the convenience of business users.

Simplification, without the stress

A research report released last year estimated that in 2014, large financial institutions in the US would spend close to US$75 billion on IT improvements that would help them ‘change the bank’ rather than ‘run the bank’. Change seems to be the operative word for banking across the globe given the fact that that every aspect of the business of banking is also changing.
Customers are no longer satisfied with mere transactions; they demand a personalized digital experience that resonates with their financial circumstance and lifestyle. They are drawing from their experience from retail, which is also where they learned that they can make businesses work hard to earn their loyalties. Digital players who already have the loyalty of these customers are extending that equity into the banking space. New models of enterprise technology consumption are leveling the playing field within the traditional space. The events of 2008 have also infused regulatory oversight with a newfound fervor that will only exacerbate the cost and complexity of compliance.
All things considered, banks have to change, or better still, transform, in order to compete in the new norm. And that transformation will have to start by addressing the systemic complexities that have gradually built up in banking systems over the years. Beginning with the simplification of banking platforms.
But platform simplification is a capital, time and risk intensive process. Even if banks were to get on board with the capital and risk pressures, the time to performance is still too protracted to yield any immediate benefits; unless they opt for the rip & replace route, in which case the risk of business disruption goes through the roof. What banks need then is a system of progressive simplification and transformation that is optimized for capital, risk, time and performance.
Componentization is the concept underlying the process of such systematic and phased simplification. Componentization enables banks to design their transformation strategy around their individual investment capability, risk appetite and business performance priorities. Most importantly, the componentized approach creates a sophisticated platform for future evolution even as it simplifies and transforms existing systems.
It has always been easy to make the connection between platform simplification and competitive advantage. But with componentization it also becomes easy to achieve that ideal without the agony of extended rollouts or the stress of instant transformation.

Optimizing Training Costs in Core Banking Transformation

Core Banking transformation enforces change of such magnitude that it requires massive re-training of staff. Almost every user in the bank will be touched by it and therefore large budgets need to be set aside for training. In a budgetary crunch, when banks are looking at cutting costs everywhere, training is almost always a casualty. At the same time no one wants to cut corners in improving employee productivity.
Training budgets can be managed in a variety of ways. One way of doing it is to align training with the transformation program and deliver it just in time and in the right dose. Often, training is delivered in a large package at the start of the program. While the core team does need such training, others need not be trained upfront. In fact, business users need to be trained “just in time”, clubbed with other activities and delivered in small doses. For example, at the time of product parameterization, much of the training needs to focus on imparting sufficient knowledge of the product or solution to ensure they are parameterized correctly. The detailed end user training can come just before UAT (User Acceptance Testing) or even clubbed with it because this is when the user will actually use that knowledge to maximum advantage.
Also, all training need not necessarily be purely instructor led or  imparted through e-learning. A right mix will deliver maximum bang for the buck. There are complicated parts of the solution, which are best taught in person and straightforward parts where an instructor will not add too much value.
Outsource user training to the extent possible where the option is available. Also remember that training from a vendor may not always be the cheapest. Explore if the vendor’s partners or even third parties can do it. Ensuring control over such outsourced training partners is key. Please see if you can license quality training material from the vendors, or the instructors from your partners or third parties who are doing the training. Where there is a large user base, take the help of the vendor or make them responsible for managing the third party / partner training program and quality both. Most vendors can also consult on user training for rollouts and where they have an extensive partner eco-system in place, deliver training at different price points.
All e-learning need not be custom made. A mix of standard e-learning modules from the vendor along with customized content specific to your organization may be a quicker and cheaper option. Of course, a large user base can make the cost of customized e-learning a non-issue, but in all other cases mixing and matching will yield better returns.
Have the right expectations, because everything need not – and even cannot – be learnt during formal training. Job cards, online simulations, demos and other aids can deliver just in time training for the end user who has learnt enough to do most things. The rest can always be learnt on the job.
Modify the duration of training based on the experience with the initial batches.  Training can be optimized and made most effective through intelligent use of feedback.
And you can now crowdsource training. The earlier batch of trainers should be encouraged to train others, make videos, deliver webinars, write training material and share it on the intranet. Today there are systems that make crowdsourced content look “almost” professional, without actually using professional studio equipment. While qualitatively, this content may not always be “first class”, it would still be good enough to achieve the purpose of training the internal user, and can be improved substantially through a process of iterative changes over time. Leverage “in-house social media” for training. Reward contributors with a small part of the training costs saved.
Remember, the most important purpose of training is to deliver business results.  Be unconventional. Innovate. Training can make the difference between success and failure of the transformation project. Don’t cut down on training, when you have so many options to cut down its cost!

Is innovation all about managing change?

I did an Internet search on “most innovative companies in the world”. Predictably, the search engine that I used, Google was in the list along with several other new-age organizations. There was a clear pattern though – none of the lists featured top-notch business or management consulting organizations at the top. Isn’t it surprising that reputed management consulting firms that drive innovation at several client organizations are not considered innovators themselves? They have the ideas and the expertise, so where do they falter?
This brings us to the central idea of this discussion that  innovation is not about a breakthrough idea, but rather about managing the change within. The more nimble, agile and receptive an organization, the more likely that it will be able to execute the changes to implement the innovation.
Innovation is really more about the last mile than the first.


The downside of success is that the organization is tempted to shun innovation and continue doing what made it successful in the first place. When an organization feels there is “nothing to fix” it becomes increasingly difficult for it to think differently,  change course or innovate.
There are two broad categories of innovation – breakthrough and incremental. A breakthrough innovation disrupts the innovator organization itself, and hence is not accepted very easily. Incremental innovation is less disruptive, and runs as a series of initiatives bringing about step change and incremental benefits in cost, productivity and output. Both types of innovation are important for the health of the organization; however some studies indicate that the excessive focus of large organizations on incremental innovation takes away precious energy and focus from the breakthrough variety.
We mentioned earlier that innovation is more than idea generation. In fact, a true innovator picks up the thread from where an idea generator leaves it. The key is in implementation – aligning the stakeholders who are impacted by any disruption to their status quo. It is no different from the political process of change management where each entity is made aware of what lies in store.


Anyone who has worked in a business consulting setup will never tire of talking about frameworks, tools and models. I can say from personal experience that consulting firms have a number of disparate tools, techniques & datasets to play with, but hardly any business applications to encompass them. So knowledge within the organization is a necessary but not sufficient condition to drive innovation.
There is an opportunity for consulting organizations to create multiple problem solving business solutions, backed by industry best practices, benchmarks and proprietary knowledge acquired over time.
Here, innovation is about productizing consulting services and offering to the end-user an integrated experience that solves a problem. The basic difference between products and services is that a product is additive, whereas a service is repetitive or iterative. Products get enriched over time, but services repeat the same cycle of creation and consumption.


A consultant’s biggest challenge is in believing that even original, highly creative work can be standardized and subsequently productized.  Consultants take pride in the highly differentiated work they do, which according to them, can’t be coded into any business application. They apply analytical capability to generate meaningful insights from raw data. This is how it has worked since decades.
Consultants do recognize that today there are modern technologies, which can automate their core skill – the art of problem solving. But even though such innovation might be to their clients’ benefit, it is disruptive to the consulting organization itself. This is the biggest obstacle to innovation, which must be addressed for any initiative to take off the ground.


1. Clearly articulated vision: The end is the best place to start. What problem does the application solve and how? A perfect prototype of the end solution is the ideal way to demonstrate this. My experience says that spending more time in creating a good wireframe pays more in the end. It becomes the vision to communicate in best possible way. It also ensures that the idea is thought through and the value proposition is sharpened enough. How the different stakeholders use the application to derive value is best explained in a well- designed prototype.
2. Client validated business case: Once the vision is captured, it is imperative to establish that the idea is feasible and profitable. There should be a documented analysis of cost versus benefit in the short and long term. This is also an appropriate time to run the idea past clients and conduct a workshop for them to demonstrate the prototype. This will help build a potential pipeline and lend serious credibility to the idea.
3. Right sponsor for the idea: Once the idea is found to be viable, it is time to get a sponsor for it. The more radical the idea, the more critical the role of its champion. The sponsor should have the formal authority or influence to effect the change. It is therefore important to identify the sponsor early on and involve them in the process of co-creation.
4. Plan for incremental success: A key factor of success in any innovation is  implementation. It is necessary that the implementation program be planned in multiple phases, with quick wins in each. This would help to overcome skepticism or change course if need be. It is also important to invest incrementally. Such a phased approach would minimize disruption.
5. Believers vs non-believers: A good change management process should accommodate both sides. If the idea invokes criticism, it should be taken as a positive sign of involvement. No reaction is more alarming. With the passage of time and successful implementations, the number of non-believers should reduce; if it does not, then there could be a problem in the innovation itself.


Consulting organizations or setups can leverage IT to create business applications for their client’s use that can diagnose, solve and monitor client problems on an ongoing basis. These applications, which make use of data, benchmarks, frameworks and proprietary knowledge, will demystify some part of business consulting; they will also provide greater value to the client and licensing revenue to the consulting organization.

Annoying Customers by Deploying Technology Not Yet Ready for Primetime

Some months ago, my workplace Employee ID card was replaced by a smart card with an embedded chip and the simple swipe at the turnstile permitting entry, now also needs a fingerprint scan. Whereas in the past I could enter with one swipe, now I need to scan my fingerprint twice (sometimes more) every day. If I do manage to get in at the first scan, I am unreasonably happy. I am one of those gadget freaks and like to try out new things all the time, but this fingerprint scan at the gate beats me! I thought there was a knack to it that escaped me, but no, that isn’t so. Having observed other people go through the multiple scan process has convinced me that this is standard fare! The technology works, in the sense that it lets me in and out everyday and I haven’t yet got inextricably stuck. But it’s frustrating as compared to the earlier experience where one swipe was enough. Clearly, the fingerprint scanning technology works but I feel that it is not ready for primetime. If this technology were to be used with customers, they would get annoyed and competitors would look to take advantage of that.
Banking today is big on technology. I’ll cite a few examples. My bank provides a virtual keyboard for entering the password. It’s a picture of a keyboard on the screen, on which you click with the mouse pointer, but the letters, symbols and numbers are all jumbled up. My nine-character password takes forever to enter, as I painstakingly look for each letter, number and special character (all of which are mandatory in my password). And each time I visit the login page (or re-enter the password) the keys get scrambled again! And they are tiny, so sometimes you do click the wrong key. Fortunately, it is optional and unless I am operating from what I feel is an unsafe, public environment, I just skip the virtual keyboard. The bank’s idea of safety is not at all user-friendly. And because I don’t use it, I’m also circumventing the additional security. The bank feels that they have made the site safer, but it is not really so.
Another example is voice recognition technology. This is rampant in banks in the US and also at most call centers, be they from a car insurance company, a cable operator or a telco. My voice is not designed for recognition by whatever system or software they use and though I try to sound as American as possible, it is to no avail. Fortunately, some of them allow me to use my phone dialing keypad to key in responses and that has made it easy to bypass voice recognition and get the work done. As for the rest, I  struggle until I get to a human call center agent. Voice recognition works but is not a technology for primetime and will just annoy customers if they don’t have alternatives.
Right now, mobile phone apps from banks are a real challenge and annoyance for customers. Every bank that I have an account with wants me to use their mobile app on my Android Phone. I resisted the urge until recently, when I decided to install apps from four banks; it was a horrible experience. Installation was painful and I have still not managed to get one of the apps started (it is installed but I can’t do anything else with it). Functionality is even worse. For some reason, most of the banks insist that I install the app only on the device with the registered phone number. I use one phone number for making calls and another for data access because I want my voice call phone battery to last longer than a day. It looks like I can’t install apps on my data phone unless I register the phone number with the bank. The apps internally send a text message to verify the phone number and do not allow access to my bank data if the phone number does not match! Also, once all the checks are done, the access to the app is protected with a flimsy 4 or 6-digit numerical mPIN, when my Smartphone is easily capable of entering an alphanumeric password! When most customers are worried about security on the mobile phone, protecting the app with a 4 or 6 digit NUMERIC only pin does not make me feel secure. Also most of the apps are not able to show my Term Deposits and that’s the one thing I check the most! I prefer viewing the Internet web application through the browser any day. Only one bank app came anywhere near acceptable and would have been had it not got stuck in my very first login! The others are pretty much dull or not so useful or both – clearly not ready for primetime and just there because it seems the thing to do.
I don’t know why banks don’t get the message that using technology, which annoys customers is doing them no good. I suppose the lure of being the first off the block, or the pressure to at least be “me too” drives this to some extent. Or perhaps it is the pressure of meeting impossible deadlines that results in such technology going out to customers before it is ready for primetime. But study after study shows that customers are not happy with this approach. Technology must either provide a great customer experience or deliver solid value. Gimmicks have no place – they attract customers, then annoy them and often drive them away. That’s a lesson that banks are yet to learn.