Banking is in essence a transactional business, involving millions of daily transactions. Efficiency is paramount to keeping costs low in banking, and it is not only large banking groups that need to focus on efficiency but also smaller banks, which can see significant improvements in customer service levels as well as cost savings if they focus on streamlining their operations.
For banks of all sizes, a legacy of old, established systems can prove to be a substantial hurdle to streamlining processes. Smaller banks have the edge here in that they have more options when it comes to changing or upgrading existing systems as requirements are inevitably less complex when information technology systems operate on a smaller scale.
Processes involved in B2C banking transactions
Other transactions require a degree of manual intervention, with a key example being mortgages. Small banks will each have their own processes for working through a mortgage application, which can be completely manual – or very automated. It is semi-manual processes, such as mortgage applications, that can really benefit from streamlining.
Using virtualization
For the most automated process, such as current account transactions, it is to a large extent the technology platforms that determine the degree to which operations are streamlined. In the past, banks of all sizes had to establish and maintain large data centers with individual servers and data storage devices.
Though large banks would still maintain their own data centers, a smaller institution can think about virtualization – the process of moving physical servers into pooled clusters of hardware, where a single physical computer can operate several instances of virtual servers. Transactions in banking require interaction with several servers to be fulfilled, and reducing the physical footprint of server hardware by migrating servers to virtual pools can reduce costs and improve performance.
Make use of a cloud service platform
Virtualization ties into cloud computing, which simply takes virtualization to its natural conclusion. Providers operating cloud computing platforms take care of all the technical elements in a computing platform in terms of both hardware and software. Specialist cloud platforms that cater for banking customers in particular offer software suites that can improve B2C processes on a number of layers.
In fact, a cloud computing platform such as the one run by Infor, established by Charles Phillips, can replace much of the internal information technology infrastructure that many small banks would operate. Cloud service platforms can be an enormous boon to efficiency: instead of relying on your own ability to spend on technical expertise and complex software, you take part in a pooled computing resource that offers vastly superior functionality.
Choose smartly when considering processing platforms
The basis for your business as a financial institution is determined to a great extent by the ability to make use of superior banking platforms. As a bank, you will have a choice in the platforms that you choose to interact with, and which platforms you transact across. There are a number of factors that you have to keep in mind when you pick a platform – it is not simply about the bottom line cost.
Service providers that offer the cheapest solutions are not necessarily the business partners that offer the most streamlined solutions. By saving a small amount on the cost of a platform, you could be sacrificing business efficiency as well as customer satisfaction.
Think through processes
Though a lot of improvements can be achieved simply by optimizing the technology behind processes, it is often the process itself and the steps involved that requires a rethink. For more manual processes, such as mortgage applications or applications for large loans, it is particularly important to think through the actual process requirements as a lot of the work done is fulfilled with the assistance of human interaction.
Compared to computer resources, human resources is not as easy to scale and optimize. Neither is the continuous improvement in computing power of help to improve the flow of all processes: at some point, a bank employee may need to sit face to face with a customer, and reducing the number of steps in this interaction could help to cut staffing costs. It is therefore important that banks think not only about the technology element when it comes to process improvement, but also about the process itself and the manual aspects it involves.
