What centralisation and streamlining mean for core systems

Stuart Gulliver sounded a war cry. Substantial improvements in cost-to-income ratios will be achieved at HSBC through a series of measures including streamlining and centralisation. Every UK retail bank must follow suit in order to compete, but what does this really mean for core systems and those that work with them? You could say that it means consolidate systems and improve processes to achieve economies of scale. You could say that it means eliminate redundant and overlapping services. You could say it’s a cost reduction programme to eliminate fat.

Actually it is a chance for banking professionals to demonstrate the value of standardised systems, processes and service orientation - to align and synchronize. But this is an old story. Centralisation inevitably takes operations away from the workface – that is, away from the customer, so you have to counterbalance centralisation with improvements to customer service, better customer information, to individualise the customer experience and make it faster and more responsive. This should all be achievable!

How many banks have several different business units doing much the same back-office processes for different financial instruments? How many banks have numerous systems each covering different types of loan? Core banking systems that can really help consolidate application systems and implement effective processes through improved process models are the ones that will be most successful. That is to say, those that can introduce best practice and implement their systems quickly and efficiently will win. Centralisation and the implementation of effective processes is the key success factor every time. These should be good times for the suppliers of core banking systems and their implementers. They could herald a return to growth for those banks that deliver effective consolidation programmes and introduce labour-saving best practice.