By Tim FitzGerald, Casewise Finance & Banking Sales Manager

Today, maximising profit is harder than ever for banks. The large retail banks have been forced to sell off branches and the investment arms are under increasing scrutiny. The need to change- be it adapting to newly imposed regulatory frameworks, to differentiating yourself from the competition and growing organically while also encouraging customers to switch to you all requires an agility never before experienced in the financial sector. Organisations which can change quickest that are the ones that will surge ahead.

All this requires financial institutions to examine how they might better interact with their customers, see how best they can improve service to their customers whilst making it more cost effective to process once a piece of business has been initiated – be that a trade, a payment, selling a product or indeed introducing new products.

For the financial services sector, successful use of software and IT systems should mean more than just being able to maintain a good working relationship with your customers; it’s about continual improvement, offering more to your existing customers whilst attracting new ones and growing the business.

The banking sector relies heavily on IT – electronic trading and settlement is a mainstay of the industry. There are innumerable systems in banks on which processes are conducted. However it is this myriad of siloed systems and their inherent complexity which makes it hard for the business to visualise an end-to-end business process.

Instilling rigour
We have to ask what the bank is, and what does it aspire to be? But how do you make the journey from ‘as is’ to ‘to be’ without mapping it, planning it and making best use of your resources? How do you do Basel III? How do you cope with RRP? How do you introduce that new mortgage product? How to you separate your investment arm from your retail arm? How do you abdicate from those non-core banking activities?

We only have to look at recent calamities in the financial sector. The Libor scandal, mis-selling PPI, rogue traders, liquidity inadequacies, bank bail-outs and system outages leaving customers unable to access their accounts or pay bills. All of these, without exception are down to a lack of proper process or adequate process rigour.

Everyone is responsible for process rigour, but the bank’s board and senior directors are accountable.

Financial institutions operate in a highly regulated industry and it is everyone’s responsibility to follow the right process. But is that process properly documented? Is it published, accessible and digestible by those who need to follow it? Is it auditable? Is it relevant and up to date? Is it aligned with the need to change or operate differently? I suggest that often the answer to most or all of those questions is “no”. Thereby how can a bank or any financial institution effectively mitigate against operational and reputational risk unless this is put right?

See more – do more
You have only to recall the day the London Stock Exchange’s rules changed, 27 October 1986. It was dubbed ‘Big Bang’ because of the massive increase in market activity expected from an aggregation of measures designed to precipitate a complete alteration in the structure of the market. Traders no longer walked the floor of the exchanges but conducted business electronically from their desks at an unprecedented lightning pace. The introduction of ATMs, BACS, CHAPS, Faster Payments, SEPA, credit card authorisation and Chip & PIN, contactless technology, as well as the information for traders to understand the market, such as services provided by Bloomberg and Reuters and now ‘Bank 2.0’ – the advent of mobile banking services – all these require a heavy reliance on technology. Without this technology enablement we would never have seen the services provided today.

However, for banks to be truly competitive there has to be not just better system integration but better visualisation of the business processes. Better visualisation of how the business process of selling a mortgage interfaces with a current account, better visualisation how a trade is influenced, how it is settled and better visualisation of how the transfer of funds occurs. Who owns that process, when was it last reviewed? What different geographies and locations does that process encompass? Who is involved in that process? Where are the bottlenecks, where are the risks? What else runs on those systems hosting this process? What happens if a location is closed, individuals leave the bank, get promoted, roles made redundant that operate within your process but are outside your remit? Can you see, plan or cope with these events?

There are three key elements the banking sector should take from the recession:

• The ability to adapt to change WILL separate the winners and the losers;
• Better process visualisation is THE only way to remain competitive;
• Better process rigour is THE only way to survive.

Tool up or die
‘Transformation’ and ‘adaption’ are the watchwords of today’s financial sector. However, one should not look at this downturn of the economy to be where the bloodletting will occur. Unless organisations can effect agility and be adaptable when the upturn comes when all the cutting back has occurred; if an organisation isn’t capable of seizing the new opportunities a resurgent economy brings; if it cannot cope with new invasive regulation whilst simultaneously growing its business; if they cannot attract new customers and launch new products quicker than their competitors- then that is when they will die.

Organisations need the tools in place to see the ‘bank on a page’, to be able to stand at the chart table in the captain’s cabin, to know where you are and know where you want to be, to be able to plot the course and know immediately the challenges along the way. Because if you can’t here be dragons.

About Casewise
Established in 1989, Casewise provides Business Process Analysis, Business Process Management, Business Architecture and Application Portfolio Management software and consulting solutions to over 3,000 major global organizations. These solutions enable organizations to visualize, audit, report, improve and continually maximize complex operating processes and technology infrastructures.

With a team of passionate experts at offices in the United Kingdom, United States, Australia, Belgium, France, Germany, South Africa and Spain – and a network of global resellers – Casewise provides thought leadership and solutions enabling clients to achieve stronger strategic planning, better decision making and improved business efficiencies.

For more information please visit www.casewise.com.