As always with surveys, there are many numbers and graphs, but seldom do they answer the one-question clients always have: “What does it mean for me…?”. In this recent CSC-Finextra study on Efficiency, we asked banks around the world, about what efficiency meant to them.
Although 35% of the respondents state that they use utilities, it remains unclear whether the efficiencies gained are sustainable or just a one off. Furthermore, 49% of respondents believe in opportunities for new or expanded network-centric services, but no one knows which ones, how to compare them, how to address the establishment cost or how to participate in existing services.
So what are the barriers to answering these questions? There are at least three prominent ones:
- First, infrastructure silos, as pointed out by 60% of our respondents. These silos lack a clear view of the essential infrastructure to achieve efficient run-the-bank operations. The original systems are often so old and the expertise to run them is dying out (literally) that understanding the single blue print is a challenge for Business and IT. Movement to new Next Generation Infrastructure is often a very costly, political and resource intensive process subject to numerous long, complex RfPs and organisational impediments. We must therefore “carve up the elephant” for our clients. By providing banks with a transparent roadmap that dynamically shows the present state and how to move to the Infrastructure as a Service model (IaaS), they can decide on what is core to running and changing their bank and what is not and for the latter how to best deliver it.
- Secondly, people are the number one efficiency driver in the bank, not STP and the latest technology. Therefore, it comes as no surprise that 54% of our respondents cite cultural and departmental issues as a barrier for progress. Next Generation efficiency requires Next Generation capabilities and competences not only at an operational level, but also at a mind-set level. Recognising that using utilities is a way to broaden your skill-sets, learning how improve capabilities with peers and extending the fabric of the bank to a vibrant and innovative ecosystem of partners are seldom mentioned in the numerous transformations, trainings or grapevines in the bank. Quick and continuous assessments of the Next Generation capabilities and competences allow the bank to focus and align their human capital investments in the business and IT areas and build the foundation for efficiency.
- And finally, money talks. 46% of our respondents cite utility establishment costs as a significant barrier to uptake, paving the way for innovative financial and investment models. One of the most interesting insights from our clients is that they do not recognise their own IP as part of their efficiency drive nor their ability to become a market utility themselves. Utilities can in effect create an investment and revenue opportunity for the bank. In this, challenger banks like FIDOR, to mention but one, are miles ahead in their thinking. Working from the premise that everything, especially workflow, is open and digital first in the bank, they combine active engagement and participation from their clients with monetary rewards to create IP. This IP is an excellent example of a Next Generation advisory “utility”. Many major banks are currently considering this model. Developing innovative financial models with participation from CSC and partner ecosystem is a rapid way to create clarity of the investment, running costs and implementing cost and efficiency savings short-term.
So the answer to “what is in it for me?” is ‘an opportunity to enter Next Generation banking with full knowledge of how to overcome the barriers to achieving efficiency in a safe and cost effective fashion’.