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Rationalization: reduce complexity and innovate!

Let’s face it. Complexity is a fact of life in financial services.  Mergers and acquisitions, organizational changes, and service offerings across multiple locations result in a maze of disparate and disconnected applications and platforms.  

In this environment, radical action is needed to lower maintenance costs, improve operational efficiency and improve customer satisfaction. Rationalization today is mandatory to simplify and improve the way that financial institutions organize their daily business and deliver services to clients.

How do you achieve rationalization and establish a solid base for innovation – to deadline and budget?

Rationalization enables banks to get closer to customers and employees by simplifying products, processes and systems. But all too often, simple, user-friendly systems containing accurate and complete information remain a dream.

It doesn’t have to be this way. Banks can choose from different ways to rationalize. Here are some examples:

  • Product rationalization: Retire out-dated products and go back to a few simple choices.
  • Mid-office rationalization: Develop one way for customers to access services and products independent of the channel they use.
  • System rationalization: Consolidate, upgrade or decommission legacy systems.
  • Process rationalization: Standardize and optimize processes, for example, Lean. Why not re-use optimized processes across branches and countries?
  • Data rationalization: Clean up data. Store customer, transaction and product data only once to avoid duplication and incorrect data.
  • Shared services: Centralize systems and processes with the opportunity to optimize them once they have been centralized.

In practice, an actionable rationalization plan often includes more than one method. The following criteria are important when selecting your approach:

  • Ease of use and maintenance by customer and employees
  • Organizational strategy
  • Needs of business and IT
  • Business priorities
  • Current-state environment
  • Availability of input data and resources
  • Costs of solving the problem
  • Disposable time for solving the problem
  • Potential benefits to be gained with the solution

In this era of drastic regulatory and compliance demands, which put strain on firms’ budgets and resources, system and process complexity will only escalate. Employees and customers are increasingly intolerant of out-of-date systems and products. Now is the time to dust off your business practices - front to back!

Subsequent blogs in this series will focus on examples of successfully implemented rationalization projects. 



Comments: (1)

Paul Love
Paul Love - Konsentus - Nottingham 17 March, 2014, 13:41Be the first to give this comment the thumbs up 0 likes

Excellent blog Dominika, showing how to find the way through the minefield of multiple (often legacy) systems that many banks now find themselves with.

But we must also remember that the rationalised system must also offer the functionality and sophistication demanded by modern consumers, together with level of personalisation required to retain and grow a hard won customer base. Failing to provide that risks throwing the baby out with the bathwater.

Choosing the current “least worse” solution as the target for consolidation does not always provide the best platform for the future. Taking the opportunity to implement a new open solution that enables innovation may be seen as a bold step at such times, but in hindsight not doing so looks much more risky.


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