The Difference Between Good and Great Banking Services? The Back Office.

Time and money has been spent on getting customer-facing services right. Now it’s time to fix the back-office. 

July 9, 2018
by Percy G. Johnson, Jr, Vice President Agile Solutions

Image Credit: Shutterstock

For the last three years at least, financial institutions have focussed their research and development on making their customer-facing products better. By and large, they have succeeded in making improvements that provide a more welcoming environment and transparent user interface. For mobile-first, digital-savvy consumers, the banking experience has never been easier.

But the goal for most organizations is to deliver a truly personalized experience, and we’re still some way from achieving that. Front-end applications and better onboarding systems are not enough on their own. Personalized banking requires data-driven insights and actionable intelligence driven by the back-office. Those ‘behind-the-scenes’ operations must be perfectly aligned with the customer-facing software in order to reach the next level...and that’s where the real challenges lie.

The race is on to transform the banking back office. By 2020, nearly half of all spending (40%) will be on operations, according to the 2018 North America Banking Operations Survey from Accenture, and those operations will transform the way that financial products and services are managed.

Enabling insight-driven decision making.

What would an integrated digital banking system look like? It would give consumers the ability to access all their accounts, and all their products, through multiple digital touchpoints at any time of the day or night. Furthermore, it would let customers begin a seamless banking journey at one time on one device and continue on another device, for example from mobile to ATM, to the physical branches. This omnichannel access is ideal for consumers, but a lot more difficult than it seems to put into practice, and it requires sophisticated, data-driven infrastructure.

By its very nature, the kind of service that can accommodate these flexible banking needs will produce large data sets in the process. That data will have an inherent value which can be used to better understand the consumer, and to create products which meet the consumer’s changing needs.

Extracting actionable intelligence from data is the key to building better products and services.

When incoming information in all its forms is captured and classified efficiently and automatically, it then leads to data extraction and analysis which feeds a workflow and populates a database with valuable insights. The Accenture report found that “almost one in two banks foresee banking operations’ primary role as achieving straight-through processing and harnessing the full potential of customer and transaction data residing in operational systems.”

Transforming Legacy Systems.

One of the largest challenges that financial institutions face is updating their legacy systems to deal with the new opportunities presented by cloud computing, big data, mobile and a distributed workforce.

Nearly 70% of all banks believe that their back office is not tapping all the value that lies within its data, and they target the legacy systems they are using as being responsible for the problem.

When asked what the greatest barriers to digital transformation are, just under 40% of bank executives named their legacy IT systems as being problematic. In addition, 24% of those surveyed believe that their staff are not equipped with the right skills and the right equipment to adapt to new systems.

Dealing with those problems simultaneously will be key to transforming the back office. Employees need to be part of the solution, and encouraged to adopt new ways of working that may seem challenging at first.

An integrated Enterprise Content Management (ECM) system is vital for employees who are learning new ways of processing data. One of the biggest challenges with many ECM systems is that they seem hard to use at first, and seem out of sync with the current workflow of employees. Success will come from integrating new processes into the systems that are already working to increase productivity, provide intelligence and structure, reduce manual processes and leverage existing rich data.

What forward-thinking financial institutions require is a different way of thinking about the back-office. It’s no longer a hidden, opaque part of the process. The entire operation needs to work as a unit that generates data while providing improved customer service.

The 2018 Banking Survey gives an example of chatbots that are simultaneously providing a service while gathering data from consumers at the same time. “Instead of satisfying internal clients, operations will be increasingly responsible for engaging directly with consumers and giving them a direct window into bank processes and data.”

The change in approach can be daunting at first, but it is proving to yield stunning results. Accenture reports that the DBS bank of Singapore used a combination of cloud, open APIs, data analytics and AI to increase income from consumers by 23% in just two years. And there are many more examples of incremental change leading to increased profitability.

The back office is moving out of the shadows and meeting consumers face-to-face for the first time, and early results are very impressive.

For banks, the key is to work with partners who understand data and the financial sector and who can take a ‘big picture’ view of the transformation process . In so doing, they will enable financial institutions to match the progress they’ve already made on the front-end with the immense potential still trapped in unwieldy back office operations.

AI Foundry works with financial institutions around the globe to provide agile solutions and actionable intelligence to solve today’s biggest challenges.

Get in touch with AIFoundry to understand how they use data to facilitate Business Process Management