Imagine a last-place football team that needs new talent, yet spends so much on uniforms, balls and other equipment, it can’t afford the salaries top players demand.
By V. Balasubramanian, CTO, Banking Banking & Capital Markets, CSC
That’s essentially the situation facing many banks today. These banks need innovation to keep pace. Yet they spend up to 80 percent of their IT budgets on day-to-day, “keep the lights on” activities. While these run-the-business activities are important, this level of spending is excessive. It leaves banks with insufficient funding for vital change-the-bank innovation.
What’s changed to make bank innovation so important now? Four big areas:
- Customer Experience: Banks are under pressure to offer a seamless experience for both customers and employees, regardless of the channel, for more choice, collaboration and mobility.
- Governance, Risk and Compliance (GRC): Government and industry associations present a broad, increasingly costly array of regulations and require banks to manage and report on an assortment of risks.
- Payment Disruption: New companies, many unregulated, are chipping away at banking’s most profitable sector, namely, payments. These startups can leapfrog traditional banks with innovative technologies and customer experiences.
- Operational Efficiency: Banks are under pressure to deliver new, dramatically higher scales of efficiency.
All these measures are costly, meaning banks need to allocate more funds for innovation. But how? With two important steps. First, banks should make step-changes that lower the costs of their run-the-business operations. Second, they need to shift some or all of those savings to projects that can change the business and drive innovation.
The net result? Banks that offer customer-focused finance. It’s the new face of banking.
A comprehensive look at how digital can power forward the enterprise: csc.com/power-forward
Read more in this position paper, Digital Banking Creates Opportunity for Customer-Focused Finance.
This paper is part of the Journey to the Digital Enterprise paper series.
V. Balasubramanian is Chief Technology Officer for the Banking & Capital Markets industry at CSC. With 30 years of experience working in the USA, India, Singapore, Hong Kong, Taiwan and China, Bala helps to define the solution strategy for the industry, leads subject matter expert teams across industry issues and helps set the technology direction for solutions. He blogs at https://blogs.csc.com/author/business-tech-of-banking-capital-markets/.