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