Is the time of Core Banking over - Time for Enterprise Solutions?
Here goes the life history of banks -
Banks were first created for handling all the financial needs of people and businesses with licenses to run their segregated operational world- designated masters of their turf.
Their turf was taking deposits and giving loans, which resulted in banks creating intertwined operations based around products - payments, mortgages, credit cards, insurances etc. to name a few with their delivery channel - "The Branch - one stop shop"
In came the new generation banks with innovation up their sleeves that led to the induction of some new channels - Direct Sales Representatives (DSR's) followed by the Call Centre.
While the DSR's worked through branches and were served by them, the call center was a whole new remote branch with an entirely new structure of operations. But still, the underlying data was delivered only through the system based on branches.
So essentially both these channels were designed to serve as a layer placed on top of the existing branch based system.
Then came the next generation and another channel popped up: The Internet.
With it came the concept of online banking and the mad rush by banks to get into this space and the thought that the branches may have met their match in internet services.
However, the underlying data was still part of the bundled product held in silos with the internet now supporting the customer's view of banking since the data speed and services was still limited and customers especially businesses were reluctant to lose their branch connection.
So again internet came about as another layer over the branch based system alongside the mesh of call centers and DSR's.
Even with the new age storm of cloud, mobile, "app" and big data the inherent problem remained the same - For time immemorial Banks have operated as a vertically integrated business with business and processes structured around products rather than customer requirements. Therefore, the limited channels of banking were ill-suited to serve the multichannel world of banking that has now surfaced.
The Challenge -
• Banking organizations being too introspective, designed products and processes to suit their requirements and rather than based on customer needs, in the process losing customer focus.
• Banks kept on adding channels over products whereas they needed to leverage data to service customers effectively
• Data within product silos cannot be leveraged
• The branch concept of end-to-end banking is lost with customer moving on to internet, mobile, "app", cloud etc.
The Need -
Leverage customer data to focus on customer service and customer relationships with a refreshed technology for the enlightened and technology savvy customer of the new world who believes in mobile, social media, 'apps', cloud etc. for living their lives. Towards this, they must acquire the right technology, which can enable them with a holistic view of customers across all channels and touch points. And that is why systems need changing
With the customers now gifted with the ability to devise and share their lives through technology, in comes the concept of "Enterprise Solutions- a business tool which provides interoperability, and integrated data and, content with easy access, to empower banks to take advantage of emerging opportunities and market changes effectively".
• An enterprise solution employs a repository of information and business logic to integrate various business channels and all the backend applications enabling flawless transactions, understanding of customer potential and risks thereby providing the ability to leverage customer data effectively
• By componentizing the database and rule engine for different banking domain and modules, enterprise solution on one hand provides business flexibility while on the other hand facilitates standardization of reports, reconciliation activity.
• With an enterprise solution banks can leverage customer information for selling not just deposits and lending products but a wide range of derivatives, insurance products and also enabling banks to perform predictive analysis of customer's future need.
• Banks can simultaneously offer better customer service and reduce operational risks and meet compliance standards and regulatory norms.
That is why more number of banks needs to change their core systems and move on to enterprise solutions.