Technology readiness

As part of an earlier blog entitled "Solid Foundation", we had covered the criticality of technology in any retail banks success. Here we will dwell a little more in detail about the different aspects of technology that needs to be addressed. This is not an in depth paper on technology but is more of a general writeup on the importance, scope and benefits of technology in retail banking.

Retail business is a detail business. The volume of customers and transactions, the complexities of the calculations and the variety of products cannot be managed unless a bank has a solid technology platform having the following aspects:

1. Should preferably be a "tried and tested" software in the retail banking space
2. Should be comprehensive in terms of coverage of products, features, variants etc.
3. Should be flexible to incorporate innovations - one way to do this is to keep everything parametrised and not hard coded.
4. Should transfer data seamlessly without the need for human intervention / duplication of effort across channels, branches etc.
5. Should be secure
6. Should have capability to handle scale up in terms of increase in transactions as well as customers
7. Should be Internet enabled and as far as possible updated on near real time basis
8. Should enable customer to access, transact etc. comfortably while protecting her security.
9. Should be able to offer "one view" of all accounts / relationships of the customer with the bank
10. Should be able to provide all calculations (interest, penalties etc.)transparently to the customer.
11. Should be able to keep audit trails
12. Should have a maker / checker concept
13. Should capture / process everything from "cradle to grave" (from the time of inception till final closure)
14. Should be able to store not just data but also images

The list given above is by no means exhaustive and is only indicative of key capabilities. When it comes to use of IT, one should look at maximising the coverage in order to reap benefits of speed, error free processing etc.

Use of applications like Microsoft office programs (Word, Excel, PowerPoint etc.), although useful, should not be confused with the IT needed. I have seen lots of organisations where they take pride in storing and processing data in rudimentary programs like Excel without realising the risks involved like data security.

It would be useful to restrict the core system to cover only the critical functionalities. For example, one need not have a single system covering all IT needs of a bank. One can break up the systems as follows:

1. Core system to track customer financial transactions for various products (liabilities and assets)
2. Support systems which talk to the core system on a needs basis as follows:
(a) For resolving servicing needs, call center
(b) For managing documentation
(c) For sales process
(d) For underwriting
(e) For analytics
(f) For marketing campaigns, media spends management
(g) For vendor payments
(h) For payroll management
(i) For statement printing, tracking outbound and inbound mails
(j) For collection and repayment management
(k) For accounting and drawing up financial statements

When there is an extensive use of IT in a bank, there is a need to make sure that the personnel is well trained on all aspects of use with special emphasis on safety and security. Taking periodical back ups, having a strong disaster recovery process, having multiple sites with data, strong password processes etc. all need to be built in place. Discipline is to be inculcated as a core value in the handling of data and all processing must be done based on preset procedures / time plans.

Banks should be vigilant and take periodic stock to ensure that non-secure methods are not used to process data. The IT system, its output etc. need to be periodically audited to confirm that quality is not compromised. Review of controls and data security should be done regularly.

When a bank is thus comprehensively ready with technology solutions to meets its data processing needs, customers will experience error free and high quality service. This will result in attracting more customers to the bank as well as help the bank increase the share of wallet of the customer.

I would love to hear your views on this blog. Please feel free to leave a comment on the blog or send me a mail at vish.sesh@gmail.com and I will quickly respond.