Commercial Banking – Managing the Client and Big Data
By: The Staff of TowerGroup, a Corporate Executive Board Company
Client lifecycle management for commercial financial services institutions (FSIs) is moving into a new phase of integrated processes and real time capabilities. This is being driven by the dual factors of improved technology and client demand for ease of doing business with their banks. Successful execution of end to end client management requires an enterprise strategy and incremental execution efforts to integrate all the lifecycle management elements. The four delivery elements are sales, on-boarding, product capability and client servicing. Commercial banking institutions have this technology initiative on their respective radars, but few have executed the critical integration efforts required to bind together the delivery elements (such as convergent systems, processes and organizational design) across lines of business or geographies. The increasing adoption of service oriented architecture (SOA) principles helps to facilitate the integration of both legacy and modern systems capabilities. In addition to the four existing delivery elements, a successful organizational strategy requires an overarching architectural layer to incorporate the enterprise use of business intelligence (BI) capabilities.
BI means different things to different entities, so a simple definition is the use of data to maximize enterprise potential. It is becoming a differentiator in this era of big data. The yearly creation of new digital information across the globe is now being measured in multiples of zetabytes (1 byte followed by 21 zeroes). This is almost incomprehensible when the entire combined content of the British Library and US Library of Congress (roughly 70 million books among their 300 million items) is estimated to be less than .0001 percent of a zetabyte. The speed and volume of data creation makes the organized, integrated management of information both an issue and an opportunity. The capitalization on vast amounts of internally generated information is an historical issue within the commercial banking industry. The combined value of integrated systems and analytical excellence ranges from improved risk management and compliance integrity to reduced operating costs and increased revenue opportunities.
Technology vendors have robust solutions to harness this valuable internal resource providing there is an enterprise level strategy to drive the process. Those FSIs who handle integration and usage of the existing and ever growing amount of digital information (including valuable data volumes flowing through their own disconnected systems) in combination with convergent lifecycle management will have a distinct advantage.
I hope that you find someone to pilot it for you.
The challenge is that the banks cannot even do (or will not do) what you propose for one individual retail customer. Why do you think that they could do it for an international enterprise?
Think they can do it for an individual customer? Why will they not provide credit under the concept of “suitability” the same manner as they have to provide it for their same clients investment advisory relationships? If they cannot provide “suitable credit” for an individual, how can they provide it to a large business? If they cannot provide suitable investments for Jefferson County, Alabama or Orange County, CA,, how can they provide it to a large business?
The paradox is that the removal of Glass-Steagall has created a different climate (as you have correctly stated) and that climate has created a juxtaposition for what is more properly understood to be a natural dichotomy. The current paradigm requires abuse for some customers or slack service in order to achieve the PE and PEG ratios etc. to satisfy the equity analysts and the bank corporate comp committee.
Your approach does have real potential value – but it is for the really smart enterprises (the ones with staff that are smarter than the bank’s staff) to take it to their banks and demand them to use it. Otherwise, a bank will implement it at glacial speed.
Or, help me to understand where I am pragmatically wrong.