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October 29, 2012

The Magic in the Banking Process is Dying. So the Bank Can Resurrect

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 7:29 AM

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The Karmic cycle of birth and death is at the heart of Hindu philosophy. And it seems to have spilled over to banking as well! The (pure) banking product has been pronounced dead by many a banker, and present day offerings are not the sole preserve of traditional banking establishments. It's the same story with services. Automation, virtualization, multi-channelization and the social Internet have made banking services highly self (service) driven.  The last to fall is the banking process. 

For decades, the process was the holy grail in banking, the source of superior service, the mantra of efficiency, and the competitive edge in a business in which it was hard to tell one product apart from another. Hell, banks even took pride in their processes! During those years, banking was synonymous with processes, and banking transformation with process reengineering. The promise of process improvement and flexibility was the biggest draw in core banking implementation; vendors of next generation IT solutions brought best practice processes, and then ironically customized them to individual banks' needs. Transformation programs had to address the dilemma of  'transform to run the bank efficiently' or 'transform to change the bank effectively'. This meant the bank had to choose between retaining or retiring its legacy systems - processes included. As banks added layers and changes to their business, they did the same with their processes. Inevitably, the process, which was supposed to simplify banking, turned into a source of complexity instead. Over time, old processes created more and more legacy and subsequently, an onerous burden. Thankfully, this is set to change.

The arrival of the next generation business platform has also ushered in next generation thinking, which dictates that the banking process is no secret sauce, to be concocted in-house and guarded at all cost.  Rather, the platform makes best-in-class processes available by default, to be accessed over the Cloud when needed, in conjunction with a set of managed services, which add to the ease of use. This means that banks no longer need to spend time, effort and money to devise and update proprietary processes; these're always available on tap. 

A point to note is that the business platform doesn't restrict itself to drudge processes; it also offers a suite of prepackaged "innovation processes" to enable banks innovate faster, more easily, more economically, and more often. This means, even as it kills the traditional proprietary banking process, the business platform is giving birth to a more powerful source of business value creation. And, so shall innovation be renewed. 

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