Using technology to drive business agility in a volatile environment

Sanjay Srivastava is head of enterprise technology services business at Genpact

I’m often asked what role technology services plays in financial services. My answer is that for the leading enterprises in this industry, it is not just a critical component of their business, it is their business. And it is changing dramatically as their business goes through some historic shifts, writes Sanjay Srivastava

Genpact recently commissioned an independent survey of over 200 global senior executives in the banking and financial services industry. More than two thirds of the respondents cited their three biggest challenges as compliance, risk management, and increasing customer satisfaction.  From the research it was also clear that they are attempting to adopt more advanced operating models that facilitate addressing increasing regulatory requirements and drive new ways of managing risk and returns based on sophisticated client segmentation.

One of the main reasons for their struggle is that organizations are hampered by what were once the ideal choice technologies for specific functions. We now view them across end-to-end processes as a set of heterogeneous, poorly-integrated, and inflexible technologies – and they’re difficult to upgrade, or even to replace. Existing IT infrastructures, often called “systems of records,” often don’t harness the potential of available advanced technologies and analytics solutions, resulting in a failure to support business leaders’ strategic objectives. As a result, financial institutions are handicapped by poor analytical practices, ineffective operating models, and cumbersome and still manual processes.

The good news is that thanks to the maturing of new advanced technologies, business process operations are entering a new chapter of accelerated transformation. Cloud-based and mobile applications, analytics and big data tools, and workflow and social collaboration technologies can multiply the effectiveness of operating models and drive more intelligent operations. Consistent with this thinking, our research also showed that banking and financial services business leaders believe that by improving their use of technology they will be able to produce the most significant monetary impact across their businesses both in terms of lowering cost, but also in driving revenue growth. For example, commercial banking and retail banking executives see on average $330 million and $261 million, respectively, in operational impact through effective use of advanced technologies.

It is clear that simply maintaining the status quo is not good enough. So what can banks do to integrate technology better to meet specific business challenges? Let’s look at three practical examples.

• The impact of the economic crunch left wealth managers to deal with new challenges in equities, property and occupational risk, putting strains on their ability to deliver improved service for customers while at the same time managing key operational tasks. Proper use of big data and advanced analytics along with automated front to back office solutions can help wealth managers overcome this challenge.
• Within retail banking, the significant growth in digital technology, and a change in focus from product-led to customer-led operations, has put pressure on these organisations to ensure a consistent customer experience, with many finding this difficult to implement. Integrated multi-channel customer management solutions can bring together technology, analytics, and operations to deliver a consistent and cost reduced operation.
• As a consequence of the mortgage crash of 2008, regulators have placed increased scrutiny on mortgage lenders, examining the prudential and conduct risks inherent in their business strategies. Efficient standardisation is now a major challenge within this industry. Mortgage loan origination platforms can offer differentiated workflow and transaction automation, which help in process standardisation that result in significant productivity gains. And new, flexible technology solutions that can be configured quickly can improve agility in meeting changing compliance requirements.

To address their main enterprise challenges, we believe that going forward financial institutions will increasingly leverage a new layer of technology – the “engagement” layer that sits between process and core technology applications. This is a thin, zero-footprint (cloud based), flexible, and configurable layer of technology that will help automate and improve processes, foster rapid user adoption, enable better collaborations between teams, and increase visibility with actionable reporting and real-time decisions. Systems of engagement can amplify operations’ economies of scale because they use people and assets better, irrespective of what, who and where they are. The result is that it can increase efficiency, optimize effectiveness (including at the customer front-end), and improve visibility, governance, and compliance as well as keep execution costs in check.

This combination of effectiveness, speed to result, and overall limited investment have made systems of engagement an obvious option for banking and financial services COOs and CFOs who need to transform their operating models today. The ongoing industry pressures as well as continuous improvement of the technology will fuel their adoption for the foreseeable future.