The economic melt-down has resulted in the transformation of the global banking industry. Mighty giants in the developed markets have come crashing down into bankruptcy, while their counterparts in the emerging markets have raced ahead. It is estimated that over the next ten years, 60% of the growth in global banking revenues will come from emerging markets.
While the growth potential is enviable, it is not always a bed of roses for banks in emerging markets. Faced with mutually interdependent forces of competition, regulation, technology upgrades and changing expectations of customers, banks are set for a range of challenges
Consumer technology advancements have raised customer expectations from banks. It’s easy to switch accounts, get information on new products and services and get peer reviews of banking services. While this has made banking easier, an adverse impact has been the decline in consumer loyalty. To increase customer stickiness, banks are trying to personalize banking at a granular level and offer innovative customized solutions. At the same time they also need to meet local regulations and deliver higher service levels – that are efficient, cost effective, and error free.
To survive in these turbulent times, banks in emerging markets must follow six business and operational imperatives:
- Inculcating the habit of higher operational efficiency leading to lower Total Cost of Ownership for assets and also enable the banks to be better prepared to organically fund investments.
- Exploring new sources of revenue by optimizing product offerings, enhancing efficiency of fee collection, optimizing service pricing, introducing new products and services, entering new markets or expanding in established ones, and enhancing sales and marketing effectiveness.
- Following an approach that offers scalability and agility, by rationalizing legacy systems, using current and efficient computing platforms, utilizing Service-Oriented Architecture (SOA), instituting automation tools, virtualization, etc.
- Innovating and shortening time-to-market for products and services by improving communication, introducing agile methodology, exploring the possibilities of Big Data, and analytics to understand customer behavior and expectations.
- Implementing and adhering to enterprise-wide process standardization to drive efficiency and reduce costs.
- Putting in place and continuously monitoring controls and checks to ensure strong risk management, governance and compliance to regulations and laws.
Implementing these processes can benefit banks in multiple ways if they are able to align IT and business strategies and deliver not only cost-effective solutions but also reduce time to market.
It is here that an integrated implementation framework of banking technology solutions plays a vital role. Banks that adopt this framework can rapidly deploy solutions to help them incorporate best banking practices, processes, and standards, providing them with the ultimate speed-to-market, flexibility and reliability.