An ongoing squeeze on budgets, combined with unprecedented levels of external scrutiny of both operations and performance, has created a situation in which improving the cost base has become paramount for most banks. Nonetheless, cost cutting need not be
an insurmountable obstacle to innovation. Indeed, it may be a key driver of it.
The new market landscape has caused financial institutions to look for ways to reduce the time required to see a return on investments, which in turn has driven demand for a more agile business environment that is able to bring new services and products
to market more quickly. As a result, improvements to the operational framework have become essential, and many banks' IT departments have begun the process of seeking out ways in which technology can be improved to achieve these ends. A number of common themes
and strategies are emerging that can be viewed as useful starting points for bringing an innovative approach into the organization.
- Leverage existing assets: perhaps the most obvious place to start is exploiting existing assets more efficiently and effectively. This can be achieved, for example, by making the most of vendor-supplied systems where new functionality is often provided
for the modern market
- Scrutinize new technology carefully: a number of IT departments are also choosing new middleware toolkits to bring existing solutions into the new architectural view, but care must be exercised here. These kits often promise to simplify the complexities
inherent in the existing integration environment while maintaining the same level of payments processing. But this is not always the case, as some banks are now discovering
- Use the consolidation opportunity: consolidation will inevitably save more than making system environments more complex, and is a critical cost-saving action that a number of banks are undertaking
- Look carefully at straight- through processing: improving bank operations is another important cost-saving measure under consideration
- Tackle fraud effectively: a bank can improve cost efficiency through better fraud prevention of payments - not just to avoid regulatory fines, but to ensure that the payment is stopped in-house rather than at the next bank in the chain