Financial services institutions must focus on IT innovation for radical change or hibernate to minimize cost and prepare for later action to survive the economic downturn, according to Gartner, Inc. Organizations that choose the middle ground risk wasting their IT budget on incremental modernization for little gain.
Organizations that hibernate are making a conscious decision to prepare for survival by avoiding IT change until absolutely necessary. They take a short- to medium-term approach, keeping their systems running for the absolute minimum cost while building up a war-chest of savings for later use on smart, innovative activities as and when market conditions improve. Gartner defines companies that innovate as at the leading edge of technology and embrace the big bang approach. They develop accurate cost-benefit models that link IT changes to business metrics so that they can quantify benefits and justify the radical transformations they encourage.
Gartner outlined four examples of how companies can embed innovation in their corporate culture and agenda:
-- Re-design branches to sell and advise – Banks must re-learn how to engage customers after pushing many away from branches through telephone and internet banking. With the help of branch automation and solid multi-channel integration banks can engage customers for transactions that add value to the relationship and make the purchase of new products and services streamlined.
-- Extreme but not complex innovation – Use technology to deliver a new level of personalization for the customer. For example, one Spanish bank allows its customers to calculate exactly how much the bank profits from their custom and enables them to donate a portion of those profits to a designated charity. In India, another bank provides easy access to a ‘Do Not Call’ register on the front page of its internet banking home page.
-- Treat customers as innovators via social networks – Customers can answer most of what organizations want to know about them, whether it’s where they shop, how they feel and what and when they want to purchase. Some new financial services entrants such as the social networking start-ups, are trying to leverage customers more effectively using this technology and customers’ increasing acceptance and use of it. The next innovation step will be to bridge the gap between pure social networks and financial social networks (FSNs). FSNs are leveraging social networks to initiate a new form of financial transaction, allowing members to not only share information but to actually start lending and borrowing to each other, cutting out the middle man – in this case the bank.
-- Innovation in payments – Financial services companies are gradually recognizing the role they need to take to transform their approach to payments if they are to maintain a payments franchise, as well as the role that payments can play in their customer propositions. Some of the innovations around payments are focused at the payment applications themselves and result in the deployment of multi-application cards and the use of loyalty applications. However, many innovations in payments will be invisible to customers, focusing instead on the more effective use of payment data and the re-architecting of bank payment infrastructures to support the deployment of organization-wide payment hubsMore information on Customer Relationship Management can be found at www.CRMindustry.com