Global banking outlook 2014-15
Infrastructure: redesigned, shared
Banks must redesign their infrastructures to reduce complexity and meet new requirements. To manage costs, many organizations will explore sharing certain back-office functions.
Bank divisions are often guilty of re-creating systems, rather than sharing them. Mergers and acquisitions have exacerbated this tendency toward siloing.
Dismantling silos and harmonizing systems will provide banks with more reliable, consistent data across the business and enable them to harness “golden sources” of data that are easier to secure. This strategy will also support regulatory compliance and the fight against cyber crime.
For banks, learning from the manufacturing sector’s “lean manufacturing” techniques might include reengineering their businesses to industrialize more processes and make further use of straight-through processing. This could cut costs and reduce errors.
One option under consideration for sharing solutions involves outsourcing customer compliance checks to a third-party industry utility. Another involves a centralized library that provides a common source of client reference data, including legal entity identifiers and background checks.
Retail banks could store customer account details within a central utility. This would reduce costs and satisfy regulatory requirements around account portability.
Some options will require careful structuring to overcome the concerns of regulators. Security issues also inhibit some banks from implementing new solutions such as cloud computing, but adoption will rise as fears are allayed. A combination of public and private clouds, depending on the sensitivity of the data, could be one solution.
Retail and business customers increasingly want to manage certain transactions digitally, rather than in-person. Instead of retrofitting existing solutions onto a digital platform, we expect more banks to lead with their digital solutions.
As customers visit branches only for complex issues, banks have an opportunity to remake branch strategy. Banks could apply lessons from the retail sector where multiple brands have “concessions” within a single department store.
Sharing branches might not work in urban areas, but it could be an option in less populous locations. For banks looking to consolidate their real estate footprints, this strategy could play a major part.
Breakdown of bank IT spend
Source: Celent, 2013×