Banking on Agility: Have you got it right?

In future, the success of banking and financial institutions will lie in implementing smart business process platforms. As per a recent Hfs report there are about 110 business platforms offered by 21 service providers in process operations. Approximately half of them are in the Banking, Financial Services and Insurance (BFSI) industry. The unique proposition offered by these platforms is to make technology agile, adaptable and easily implementable.

Across the board; be it in contact centers, trading floors, or back office departments, there is a growing dissatisfaction with the effectiveness of IT applications in delivering continuous business value. Changes often take months to implement while systems do not talk to each other without expensive retooling. Often IT architecture of a bank is tightly linked to its specific business. This is to ensure that there is optimal automation in every business process within the bank's specific culture and norms.

Today, this very concept of building IT edifices or buying expensive products is a millstone around the necks for CIOs. A platform based approach allows CIOs to easily align their systems to changing business processes, while retaining the competitive advantage and regional flavors.

A good example to quote here is the Know Your Customer (KYC) process which requires banks to review their customers' background before initiating business. All financial institutes must have a robust compliance framework to meet stringent regulatory requirements in understanding their client’s business and risk profile.

KYC onboarding and remediation processes often require each region and industry to have different rules and controls, specific to the risk profile and market conditions of that client's business. On an average most banks have 40-50 different classifications of KYC requirements and review mechanisms. To make matters worse, as the business and political environment is fluid; banks need to frequently update their business rules to ensure they adequately control risk.

Current systems are not equipped to manage such process complexities with fast changing business requirements while maintaining process agility. Every business rule change sometimes results in a "new change request" that may take days to implement, leading to delayed time to revenue or an impending regulatory penalty.

What is needed is a rule driven, agile and configurable business platform with a simple interface that banks can adapt on the go. New controls and additional KYC reviews should be easy to configure and implement without breaking up the existing systems or breaking a bank in change budgets. The first step in this journey has started with the launch of centralized KYC data service by leading data service providers.

How do you think banks can become more agile by making changes to their IT systems, do you have ideas or examples? Do write in.

About the Author

Venkata Ramakrishna is a Senior Consultant in the Solution Design group of the Capital Markets business unit. He is handling solution design for Investment Banking, Brokerage and Wealth Management clients across Europe. He has more than 13 years experience in the IT industry and is extensively engaged with the Asset Management, Fund of Funds and Retail Brokerage Industries.

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