ValueWeb by Chris Skinner

Author:Chris Skinner
Language: eng
Format: epub
ISBN: 9789814751094
Publisher: Marshall Cavendish International

DIGITAL BANKS DO NOT HAVE CHANNELS

So do banks need to start all over again? Is that really feasible? There are many reasons why I believe financial institutions need rebuilding.

First, we originally built systems in the 1960s based on automating transactions in the back office on a mainframe. The transactions were the debit and credit accounting ledgers, and the information derived from branch-based operations. In the 1970s, we implemented 3270 green screens in branches to feed those mainframes with data for the transaction ledgers. This was a cost-cutting, administrative and efficiency play. It worked. In the 1980s, we introduced ATMs to the network. The ATM was designed to get rid of tellers, and have become the main physical, electronic outreach point for most banks.

In the 1990s, the next major electronic movement was to remote customer support through the telephone call centre. Already, by this time, banks had multiple legacy systems created through M&A, expansion of offers and disparate IT strategies. Most banks had multiple head office systems on multiple provider platforms, because they built their deposit account administration on IBM, for example, but then introduced insurance, mortgages, cards and other product lines from other specialists, from Unisys to Fujitsu to Amdahl. This is why most call centre customer service representatives were already struggling by 1999, because they had to access multiple systems across multiple platforms to get a comprehensive customer view.

The result was that the central, head office based focus was securely cemented by 2000, thanks to the previous quarter-century developments of systems, and much of this focus was upon transaction processing for internal branch and call centre support.

Then things changed. Things changed fundamentally. The focus of support moved from internal to external.

It was at this point that we started talking about multichannel support, as we had to make what was previously only visible internally, external. We had to give customers online banking, and so we had to rethink the internal machine. Most banks didn’t. They just took the internal machine, and stuck a front-end, internet bank access on it through a username and password. That is why most banks’ internet banking looks just like a bank statement, because that’s just what it is—an online access to the bank statement.

We got away with offering an online access to a bank statement for a decade, but then the smartphone appeared with apps and real-time, and the emperor’s lack of clothing became visible. Most banks tried to move their head office focused internal systems from big screens onto small screens, but it just didn’t work. It didn’t work because it’s not real-time, it’s batch. It didn’t work because it’s focused upon internal cost cutting, not customer experience. It didn’t work because it supported staffers, not users.

The trouble is that the back end is still a half-a-century old layer of mess that needs sorting out. In fact, banks are cemented in legacy mess, which is why they talk about channels. Branch was layered on the mainframe; ATM another layer; call centre the next one; internet banking the last one; and mobile the latest.

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