02 September 2014

59084

John Everhard - Pegasystems

12 | posts 41,165 | views 0 | comments

Future of Banking

05 February 2014  |  2602 views  |  1

Last month Ed Miliband urged UK banks to sell off bank branches as part of the Government efforts to reduce market centralisation and boost competition. As banks are increasingly looking to move to mobile and digital channels and undergo major structural changes, their shortcomings in terms of technological capabilities are becoming more apparent. 

A number of major high street banks hit the media headlines recently with stories about service disruptions and system failures. These incidents exposed the weaknesses in the IT infrastructure in Britain’s top high street banks. One of the major reasons for these shortcomings is the systematic underinvestment in IT that has plagued the banking sector for years. With regulators and market pressures forcing banks to cut down costs, whilst trying to comply with an increasing number of regulations, it’s not surprising that IT innovation has been pushed back on the list of priorities of financial organisations. To add further to the dilemma banks face regarding investment in new systems, the majority of their current IT budgets are used in just keeping the existing systems operational. 

The lack of sufficient investment in technology innovation has put high street banks in a disadvantaged position compared to emerging start ups which are better positioned to take advantage of disruptive technologies like social media, mobile and the cloud. 

According to a recent report on the future of banking, more than two-thirds of European banking customers will be “self-directed” and highly adapted to the online world in the next five years. However, 90% of European banks currently invest less than 0.5% of their total spend on digital and have digitised only 20% to 40% of their processes. 

So how can banks close this gap between customer expectations and technology capabilities? 

To remain competitive in this market, banks will have to embrace digitalisation and technology innovation. This will require making significant changes in front-line tools, internal processes, data assets and staff capabilities and stitching them together to develop a coherent front-to-back proposition. Banks will also have to fully automate the customer service process across all communication channels to create a seamless digital customer service experience. 

The latest advancements in Business Process Management (BPM) technology can help banks achieve these goals, whilst driving down costs and boosting business innovation and customer satisfaction. After all, the biggest cost saving opportunity for banks comes from automation of servicing and fulfilment processes and migration of front-end activity to digital channels. This will give them a strong competitive edge, whilst putting them in a pole position to take advantage of the great opportunities offered by the digital world. 

 

TagsMobile & onlineRetail banking

Comments: (1)

Andrew Smith - CloudZync - London | 10 February, 2014, 13:56

The issue is worse than just a lack of investment in technology. I strongly believe that most financial institutions do not understand what we demand as customers in terms of service and what we beleive is acceptable behaviour.

Lets presume they do grasp consumer expectations, especially when it comes to technology, simply adding in BPM technology is not the answer. I (and many many others) have often said that businesses lurch from not having automation in their processes to then trying to remove the human element far too much. In many cases, businesses introduce BPM but yet still follow the same processes just with the removal of the human element.

Having the right culture regarding being adaptive/agile is massively important. Then add the right tools that can support that in terms of process management software and technology.  IMHO businesses shouldnt just look at BPM as a way of speeding up processes, because that is missing the bigger picture and no doubt will result in failure. Adaptive technologies with management are what are needed to speed processes up, raise efficiency and ensure better accountability while improving customer experiences and expectations....

 

It's almost impossible to see how big banks get to be competitive within 5 years, let alone the next 24 months. This IMHO puts big banks at great risk from start-ups, especially when we look at technical start-ups that innovate with new small agile and innovative financial insitutions. I believe the financial landscape is set for some massive changes, similar to those that we have been seeing with short term loans and peer to peer lending networks....

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from John

New rules of banking

04 August 2014  |  1191 views  |  0  |  Recommends 0 TagsRetail bankingInnovation

How can banks deal with creaking IT systems?

17 April 2014  |  1892 views  |  0  |  Recommends 0 TagsWholesale bankingInnovation

Future of Banking

05 February 2014  |  2602 views  |  1  |  Recommends 0 TagsMobile & onlineRetail banking

2014 - the year for investment in agile IT?

19 December 2013  |  2023 views  |  0  |  Recommends 0 TagsSibosInnovation

How to adapt to the always-on generation

07 October 2013  |  3044 views  |  0  |  Recommends 0 TagsRetail bankingInnovation
name

John Everhard

job title

Senior Director - Sales Consulting

company name

Pegasystems

member since

2011

location

Reading

Summary profile See full profile »

John's expertise

What John reads
John writes about

Who is commenting on John's posts

Andrew Smith