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Supporting growth while bolstering technology infrastructure in banking
Deloitte considers the 2014 technology agenda for banks
To date the Australian banking sector has seen some substantial and high profile technology investments with more planned over the coming two or three years.
Even where core systems are yet to be touched, mobile and digital initiatives are receiving particular attention.
In the area of big data and analytics, while many banks are enhancing their capabilities and leveraging these investments, real-time decision making and delivery of superior customer experience still remain out of reach for most banks.
But amid these developments, there is a real concern about various technology risk. Banks are investing significant resources to resolve inaccurate data, inconsistent reporting, and system glitches all with the ability to quickly disrupt a bank’s operations, strategy and reputation. Security will remain a top concern for banks and regulators due to the increasingly sophisticated cyber-attacks, and their fraud and operational risks.
What’s new for 2014?
Simplification – Banks are looking to technology to help simplify the banking experience for customers and to increase the speed with which new products can be brought to market. To this end technology will be at the centre of almost everything banks do in the areas of growth, innovation, compliance and operational efficiencies. Simplification also enables banks to reduce cost, reduce risk and increase agility.
Customer experience – Technology investments are likely to have a clear focus on growth, customer experience and security. Creating a differentiated customer experience that unifies mobile, online and branch channels in a more seamless fashion will further enhance banks’ value propositions.
Leveraging data – Banks could also be looking to grow revenue by leveraging data assets and technology to better understand consumer spending habits, preferences and product demand. Striving for real-time processing, tracking and decision-making will help create a world of greater efficiency and success. We have seen a huge investment in technologies which have the capability to transform banks’ relationship with their customers, including investments in big data analytics, and social and mobile channels. These investments allow banks to obtain a greater understanding of their customers’ needs and empower customers to interact with their bank in a way that is most convenient for them.
Investment banks have pioneered real-time architectures, such as Complex Event Processing to achieve sub-second responses to a torrent of data inputs. Behind the responses sit complex predictive models, which optimise decision making using algorithms and mathematics. For more see Deloitte Big Data report.
Corporate mobile – The market for corporate customers is particularly rich with significant opportunity to use technology, including corporate mobile solutions to create more value, reduce risk and drive more revenue. Using technology as the key enabler, banks can develop solutions that allow corporate customers to consolidate payments, track and process foreign taxes more efficiently, and better manage travel and expense budgets.
Compliance and risk management systems – Strengthening compliance and risk management systems is expected to be an ongoing concern. As cyber risks become more pronounced, the industry should continue to strengthen its defences across the threat landscape. Improving risk governance, adopting a more holistic approach to cyber-security and getting the board and the C-suite more engaged in cyber risk management, are all likely to be crucial. Similarly it can be expected that banks will continue to focus on regulatory issues across their businesses including Know Your Customer, market surveillance, and the impact of prudential requirements on capital optimisation. Lastly, to enhance the effectiveness of large-scale technology transformation projects, business leaders may need to be more engaged in execution, perhaps co-leading these initiatives with IT leaders.
Improved technology is the cornerstone of many industry priorities. As needs are numerous and varied, banks need to have an enterprise wide view on technology investment and focus on major priorities. Creating a more seamless customer experience across all delivery channels, improving security to thwart cyber threats, and upgrading data collection and analysis to support growth and customer service as well as regulatory requirements, will be essential. Banks should seek to leverage recent investments in compliance infrastructure to improve cross-selling and grow revenue, while keeping an eye on the upcoming work on real-time processing and decision-making platforms.
This article was first published in Australian Banking & Finance