If you have a business process that has been developed over many years, the people using the process and the people defining the process all get integrated into the technology that automates parts of it. Interfaces into the technology platforms are defined and developed based on business processes that require automated flow of information and add to the complexity of making the business operate. So, for example if you have a project to rationalise for example “customer management” or “pricing and billing” you will see that both are spread across the organisation and have become imbedded in many forms into the current business operating model.
Making an assumption that the onboarding of customers/clients are is same across the bank you can decide to start the rationalisation program. Freeze all the existing customer processes and technologies that support these processes, buy or build new technology; and then the fun starts. Unless you understand the existing business system with all its related operating rules including people’s roles, skills and processes they execute, supporting technologies including e-mail and the like, and the governance structures that assist with managing risks and escalation related activity; you will not have a successful platform migration program.
While this is going on, you start by making a decision to either buy or build based on some attributes that will make sense to the business and technology people alike. If you decide that the process can be standardised across the bank you might buy a technology that supports some or even most of your requirements. It probably never happens that you can squeeze a standardised automated process into the organisation and expect people to function effectively. This then gets you to think about the build option that raises an entirely different set of challenges. Maybe you decide to change or customise the “standard” solution you bought and then the real problem starts. So, back to our example of customer management; do we want to have different processes when customers interact with card, home loans, investment products, etc or do we want a common and lowest denominator approach?
All this happens while the business moves ahead with changes in business models, processes and governance structures, people move on and you are left as an executive with some really tough decisions. Do I shut it all down, rethink my approach and restart with new energy or continue the drive to get my new rationalised platform implemented? We have seen in our latest innovation surveys that banking customers think that “they are all the same”, banks that is and that there is no real differentiation as banks copy each other’s approaches and models. Maybe we are entering an era of rethinking the complexity behind “tooling” in financial services and with this comes a new way of driving successful “re-tooling”.
We have seen an interesting interrelationship between business innovation that drives new processes and governance models that drive new architectures and technologies resulting in major and costly change programs going off the rails. Business model operating model innovations to assist with the understanding of “commonality” (process and technology) in banking present particular opportunities. Due to the integrated nature of the various elements that make businesses successful, the entire organisation needs to participate in making these large scale changes successful. The “variability” elements, meaning the actual things that make different business units and banking services different from each other, are not really well understood. This is no fault of the people in the business as we see more dynamic and agile approaches emerging just adding to the complexity.
Enough of this, the idea was to give you a (grossly simplified and generic) picture of some recent challenges we’ve been working on across the world. So if you think that “strategy” is going to help you, think again. This problem is much bigger than using some external body to define another roadmap. You need an integrated view of innovation (all the new ways of doing things and automate those), strategic intent and key competitive focus areas (eg customer centricity), operating model efficiency, people deployment, etc.
My final comment is that banking innovation is entering a new era where the disciplines of business strategy, innovative services, business and technology architecture, processes, governance, and technology automation are redefining its interfaces.