United States

Consider new technologies for old banking problems

FINANCIAL INSTITUTIONS INSIGHTS  | 

Social media, desktop virtualization, thin client, convergence and teller capture – these are all familiar buzzwords that promise to increase productivity and security. Most have been around a while, continually evolving, and promising significant benefits for community banks. Yet there's a large gap between idea and implementation, i.e., hearing about a concept vs. understanding how that concept can be applied to your bank's existing technology platform.

Technology is a key element of a bank's infrastructure, and without it, no bank can be successful in today's competitive markets. Among its benefits is the ability to improve system-response time in branches, strengthen IT security capabilities, create operational efficiencies, provide legitimate business continuity solutions and enhance marketing capabilities. So given its critical role, Financial Institution Insights is doing a two-part series on emerging technologies. In this issue, we'll look at four of them:

  • Business intelligence
  • Customer relationship management
  • Social networking & social media
  • Mobility and management

In the August/September issue of Bank Notes, we'll consider these four areas:

  • Desktop virtualization
  • Document management & process automation
  • Data loss prevention
  • Teller capture

Start with an organizational reality check

It takes time and effort to become conversant in new technologies and to understand what will work best for your bank. The process starts with a technology investment analysis that examines your bank's IT environment, business needs, current technologies and ownership issues. Using this methodical approach will help ensure that the investments are strategic and support your organization's business plan, as well as solve your existing systems problems and achieve the expected benefits.

The IT capability model (pictured below) shows five different stages of maturity with respect to the management of systems and information – from initial (reactive and problem-driven) to repeatable (keep the status quo) to defined (stable with some controls) to well-managed (proactive and well-monitored) to optimized (mastery and leadership). If you are not in the latter two categories, then it's essential that you undertake an objective analysis and create a three to five year technology roadmap to help guide investment decisions.


Evaluate alternative technologies

Once you have assessed your existing infrastructure environment and related processes, the next step is to identify technology improvement opportunities based on your current and anticipated business needs. It is important to note that technologies you identify today may not result in an investment this year or even next year – sometimes they are part of a longer-term plan that includes integrations and upgrades that will take place over a number of years. The technology plan serves as a roadmap for all interim IT purchases. The overall total cost of technology ownership is reduced, when technology purchase decisions consistently align with a forward-looking business requirements plan.

Business intelligence

Business intelligence (BI) allows banks to significantly decrease the time and cost historically associated with generating and distributing enterprise-wide information and reports. Typically, a solution of this kind supports numerous output formats. It must be able to handle the creation, distribution and modification of a broad range of business reports, ad hoc queries and high-quality production documents, including statements and invoices.

Additionally, it should provide advanced distribution capabilities to accommodate multiple destinations and allow specific report sections to be distributed to select recipients. The fully implemented result should enable non-technical and novice personnel to immediately generate meaningful business data reports and dashboards.

Your BI solution should include ways to manage both data (used for reporting and running the business) and information (processed data used to manage the business). Your information architecture should aim for flexibility, speed and interactivity. Other requirements include the need for information to be adaptive over time, available to users in context, and be agile enough to enable innovation.

Customer relationship management

Customer relationship management (CRM) is a set of systems and solutions that allow banks to integrate and organize their customer information. An effective CRM solution provides the bank's operations with the tools it needs to acquire an accurate understanding of the customer base. The solutions should provide owners with a holistic view of all bank transactions and customer information, as well as a means to warehouse and store the information for future access. The ultimate goal is to provide a level of personalized service that makes customers feel as if they are the only one being serviced by the bank. This level of customer experience can be achieved through a CRM solution that integrates people, processes and technologies into a system capable of delivering relevant and actionable business intelligence to individuals within the institution.

The main benefits of CRM banking are increased customer satisfaction and retention. CRM solutions allow banks to get a better understanding of their customers' preferences and performance, and also aids in fast and efficient problem resolution. With access to higher quality information, banks have more opportunities to cross-sell and up-sell to customers. The net result is the ability to retain the most profitable customers. CRM can also aid in new marketing efforts, including such tasks as segmenting, targeting, account opening and onboarding.

Social networking & social media

The nature of human interaction is changing. Face-to face discussions are increasingly being supplemented – and in some cases, replaced - by a wide array of technologies, including social networks, wikis, blogs, webcasts and telepresence. This is true both for communications between a bank and its customers and internal communications between employees. As the workforce becomes more globally distributed, remote collaboration becomes more of a necessity than an option. Most companies include a certain percentage of offsite workers in their employee base, whether distributed in home offices or global branch networks. As a result, innovation is running hard and fast to keep pace with the growing demand for more sophisticated collaboration tools (such as telepresence, video conference and co-browsing).

Today's banks must recognize that a new generation of worker is just now entering the labor market. These are members of the wired generation - those young people who grew up in the milieu of e-mail, mufti-player games and the other trappings of the digital world. Their approach to collaboration and communication is profoundly different from that of earlier generations, and is having a major impact on their behavior as customers and employees.

What is social CRM?

Many think that social CRM is just another way of referring to Facebook, Twitter or LinkedIn. It is much more than that. Social CRM is a business strategy to support the bank's core goals by directly interacting with customers, prospects and other key stakeholders. It also refers to the tools used collectively to align an organization with its social media strategies. These technologies allow for more effective use of social media interactions.

The easiest way to understand social CRM in a banking context is through examples. Listed below are numerous ways banks might combine the benefits of CRM with its social media strategy.

  • A bank could monitor customers' discussions about their experiences with financial products on the various social media. This alerts the bank to customer dissatisfaction, allowing it to respond quickly to the problem and rebuild customer confidence.
  • A bank could use Twitter to gather new ideas from customers, who might use tweets to offer suggestions for future products and services.
  • A bank could use LinkedIn to identify new hires, as well as to contact promising candidates directly for the purpose of starting a dialogue and building a relationship.
  • A bank – or even a customer – could create a fan page for a bank or service on Facebook. People who like your service and the way you conduct business will sign up as fans, creating a venue for bilateral communication, marketing and networking.
  • A bank could tweet special offers to its followers, and could also fine tune its tweets to certain demographics or segments of followers.
  • A bank could use any of the social media as a market research tool. By following conversations about its products and services, it can glean real-time market data and feedback without having to directly solicit it.

Mobility and management

Innovation, world-wide penetration and emerging markets all support predictions that mobile devices will augment and, in some cases, supplant personal computers as the new e-business channel in the future. Mobile devices continue to evolve at breakneck speed. Rapidly becoming full-fledged platforms in their own right, they are capable of running a wide range of third-party applications. Mobile devices are also beginning to eclipse personal computers as the electronic channel for businesses and consumers.

Mobility provides banks with access to new and better use of channels, i.e., employing independent financial advisors to prospect for new clients. For employees, mobility means using location-aware mobile devices and applications, as well as being able to access remote data from afar to make key decisions quickly. Finally, mobile device user policies and a mobile device management plan are both essential to the success of any business mobility strategy.

For more information

Information technology continues to be an integral factor in the day-to-day operations of today's successful banks. For more information on emerging technology in the banking environment, please contact Dean Lemons, principal, at 563.888.4106.