International Process and Performance Institute

IT Strategy for Financial Institutions

What should our IT strategy be in financial institutions as we move forward in 2009? Does the current economic downturn change what we do or how we do it? What strategic imperatives should we be embracing and what initiatives (if any) should move to the back burner? For answers to these questions, and more, read on...

1) Support Current Infrastructure

For starters we must continue to service the current infrastructure and we need to look at IT activities behind that service for quick win optimizations. Service the status quo while freeing up any internal resources that you can right now.

2) Improve Customer Satisfaction

In a “down economy” it is imperative that IT expand their horizons and become involved with improving the Customer Experience. And yes, I do mean the business’s customers not “internal customers.” While this is what we should be doing all of the time, when the economy drops like a chunk of lead in a vacuum it is what we must do to survive.

How can you do that? Start by identifying ways to improve the customer experience. Your customers are the only thing keeping you in business and making sure they are satisfied customers is the only way to keep them your customers.

Rule 1 – Makes things easier. Look for ways to “capture” individual customer interactions that may be repeated, both online and with the front line service people of the business, so that they can be done quickly the next time. For example, if a customer goes through the process of issuing a wire transfer if they need to issue a wire transfer to the same recipient again, don’t make them reenter everything!

Rule – Make things simpler. For example, is there something we could do to reduce the “processing time” for drive-through teller operations? These always seem to take far more time than necessary. Can technology play a role in improving that experience?

Rule 3 – When making things simpler and easier they will reduce operating costs or they ARE NOT simpler and easier. The simple fact is that Customer Satisfaction comes from simplification of “customer processes” and when we simplify customer processes it costs us less to operate and support them (their simpler!). Rule 3 is there to help perform a sanity check on what we “think” means easier and simpler for the customer.

3) Become Involved in Elevating the Customer Value Proposition

Get out your MBA hat and start thinking “business” folks. Who are the stakeholders in the real game and what do they care about? How can you impact that in a positive way?

Key stakeholders are Shareholders, Executive Management and Customers. So we need to raise the CVP (Customer Value Proposition) in a way that increases shareholder value and fits into Executive strategy – oh, and that makes our customers love us...

Reversing that we have the real success formula. Make our customers love us in a way that helps increase shareholder value. With that you have executive strategy. Add in the fact that companies who do this will be perfectly positioned for expanded market growth in the economic boon to follow and we have a very enticing formula for success.

4) Innovate, Innovate, Innovate

What can we do? Innovate my friend, innovate. What do customers care about now? They are worried about retaining their assets, lifestyle and financial position.

Could we offer programs on a bi-monthly, weekly or daily basis for automatic withdrawal loan payments that would reduce their monthly outlay without affecting our cash flow negatively? That’s possible.

What about offering one, two or three months of no payments on certain loan types to our loyal customers by pushing loans out a bit further? Could we do that? Capital One has done so on a number of their products. If our position is strong enough to do things like this it would certainly improve our customer loyalty.

What else can we do to make our customers’ lives simpler, easier and more successful? Have you seen the recent move by Virgin? (here goes Sir Richard – AGAIN) Virgin Money. They are using the knowledge, systems and experience of a commercial business to manage other people’s money without ever taking on the debt themselves. What a novel – and compelling – idea.

What’s stopping us from thinking about things like this? What’s stopping us from looking at the sweated assets we have created in new ways that limit our risk while helping our customers to be successful?

The only thing that is stopping us is our own bad habits.

5) Build Systems Agility... the Right Way

BPM, SOA and other “process & service” centric technologies need to be deployed, but they must be deployed very carefully. Why do we need to deploy these technologies (or employ their concepts in existing technology)?

We need to take process and service centricity seriously because our businesses will place greater and greater demands on us to support different product offerings and ways of interacting between (and within) those products for our customers.

When we talk about agility and flexibility in IT systems, what we are investing in is the ability to quickly align IT systems to changing business directives – and we don’t know what many of those are yet. With IT investment, realize that much of what we do has no “ROI” until the business defines a change we can support that we couldn’t support before, or that we can support quickly and at a much lower cost than before we made the investment.

That requires a balancing act between how much we invest now against what we “think” might be the return later (and how much later). This is sunk cost so it’s a lot like other business decisions, deciding how much we can invest in an “opportunity” with an unknown return means we have to be able to do so without return at all - otherwise it is too risky. The current weak economy makes this even more important than before.

The one safe place to go is improving the customer experience. Anything - and I mean anything - we can do to make the experience of our customers better than it is today, and ideally better than our competitors offer, will protect our current customer base. Improving the customer experience now is a great way to soften the impact of the slow economy while building the business offerings that will position us for greater success when the economy comes roaring back in a boom.

We must realize that our people are the most important part of this equation. Making the choices of where we will adapt our systems to more agile design and how we choose to draw the lines on services and processes is the difference between real payback and a loss few of us can afford to take.

Going too detailed is one example of service and process oriented error. While having the smallest building blocks possible may lead to the greatest possible set of combinations by which we could reassemble these to support a business imperative it can be the difference between building a city from bricks and mortar to setting pre-assembled buildings in place. Determining the right line to draw in regards to how services and processes are broken out in our IT systems is the biggest factor in determining the success, degree of success, or failure such initiatives produce. If you’re going to be on your game in leading IT to support the creation of business success this is your most important challenge.

There are a number of other critical factors in helping IT systems be a business enabler rather than a boat anchor. More and more IT leaders are being tasked with understanding the business in great detail, as good as or better than their MBA colleagues! Being able to balance the stakeholder perspectives of Shareholders, Executive Management, Functional Management, the Customer and IT as a tightly woven ecosystem is no longer an idealistic want – it is a basic necessity.

Support, improve, elevate, innovate and build. I suppose that’s enough to keep most of us busy for awhile...

Terry Schurter

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