Trading stability for growth

Retail banks must capitalise on tomorrow’s opportunities – but at what cost? Scott Sloan, BMC Software, looks at how banks can use data management to overcome the risks involved in bringing new products and services to market faster than their competitors.

To sustain a competitive edge and grow their business, retail banks have to tackle a mountain of challenges. They must manage multi-channel integration, information security, outsourcing and the displacement of back office services offshore. They also need to adapt to new compliance regulations, enhance their Internet banking offering, automate loan processing and maximise branch sales in the face of rising interest rates.

If they overcome these risks, the rewards are self-evident: increased revenues, a satisfied and growing customer base and increased shareholder value. But they all involve risk. So how can banks minimise their risk and turn these challenges into opportunities?

Information technology will play a major role as CxOs aim to manage costs strategically while transforming their retail environment into an agile, consistently profitable and growing business. With IT budgets of €1bn becoming the industry norm – and projections that the leading banks will soon surpass annual budgets of €3bn – it is apparent that IT will play a pivotal role in delivering success.

Changing role of IT

The role of IT operations in retail banking is changing, however. Five years from now, IT staff will wonder how they ever manag ed with today’s operational processes. One issue is the move from a component orientation (such as servers, database and applications) to managing business-oriented, end-to-end IT services. Business units, lacking interest in individual IT components, are driving this evolution; they want the end-to-end IT services that support their business processes to be available and perform to meet their needs. Yet, because IT departments have been so segregated in component-oriented organisational structure and metrics, this transition is challenging.

According to the research and consultancy firm Celent Communications, ‘In the IT ROI equation, revenue enhancement will gain equal weight to cost-cutting.’ Celent forecasts that the majority of the single-digit growth in banks’ IT spending this year will be invested in new projects.

But investment in new projects – trading stability for growth – needs to be viewed with caution, says Jonathan Priestley, Director, Enterprise Data Management Business EMEA, at leading business service management company, BMC Software. ‘To bring new applications to market faster and manage existing applications, banks need tools which automate and integrate database performance and administration across the business,’ he says. ‘That way, they can better manage their critical data and guarantee reliability at a lower overall cost, while accelerating new program roll-out.’

Supporting business objectives

And this is where BMC Software comes in. The company’s Business Service Management (BSM) solutions ensure that retail banks’ IT systems directly support their business objectives. With BSM banks can identify the best technology solution to support their business and make the most of their current investments. This means they can deliver faster, more comprehensive and consistent services, increase revenue opportunities, lower the cost of ownership and reduce the risk of unnecessary IT expenditures.

‘BSM is not a vague mission statement; it’s a strategy that encompasses real-world solutions that are delivering proven results. For instance, 13 of the top 15 banks in Europe have purchased BMC Software’s data recovery solutions,’ Priestley explains.

Key industry users

UBS is using BSM to give its business a competitive edge. The bank is using BSM to identify and optimise the IT components that most impact its business, achieve greater availability and faster problem resolution, and improve communication and understanding. ‘Business Service Management helps our IT staff prioritise IT services to meet business needs,’ says Roland Kriesi, head of Systems Service Management at UBS Wealth Management & Business Banking. ‘BSM also helps us understand how our multiple business services tie into our complex IT infrastructure. As a result, we’re able to provide a higher quality of service, increased customer satisfaction, and IT systems that are optimised to meet the demands of an ever-changing business environment.’

Another key advocate for aligning IT systems with the business is Accenture. In a recent paper, they wrote, ‘The most pressing issue facing banks in relation to Basel II is data. The data management requirements will involve upgrading and aligning IT systems to facilitate data handling and ensure consistency and integrity across the organisation. Systems must be compatible with the existing IT architecture, provide a suitable reporting facility and support internal credit risk ratings analysis. Banks must start implementing these systems now, especially if their objective is to achieve the advanced IRB and measurement approaches for credit and operational risk, respectively.’

BMC Software is the gateway to overcoming risk in accelerated service development roll-out. The company’s BSM strategy helps retail banks to closely align their IT with the needs of the business, effectively manage their critical data assets whilst maintaining stability.

Further information

BMC Software Ltd
Tel: +44 1784 478 000
Fax: +44 1784 430 581
Email: scott_sloan@bmc.com
Website: www.bmc.com