Turn insights into actions
Aiman Ezzat is CEO of the Capgemini Financial Services Global Business Unit, which includes
more than 12,000 professionals serving 900 financial services clients around the globe. He talks
to Future Banking about the changing financial landscape, emerging technology and the company’s
successful World Reports.
How important is it that financial
institutions, particularly in the present
climate, reduce costs and deliver innovation?
Aiman Ezzat:
Today’s market demands that
companies work in a smarter and more
efficient manner to remain competitive. For
some financial institutions this may require
significant cost cutting, but this is not always
necessary. Financial institutions need to look
at tangible long-term solutions to serve
customers better, and meet regulatory
requirements and business imperatives.
 Capgemini works with banks to reshape
processes through new methods, tools and
technologies with an eye on efficiency, as
opposed to pure cuts. Before assessing if
services need to be eliminated or processes
moved to lower-cost regions, Capgemini
thoroughly assesses business practices to
uncover what needs to change.
The World Retail Banking Report 2009
showed that bank customers who use the
internet pay €31 less for services than do
branch users. While customers demand more
internet services, banks gain less revenue but
must invest more in technology. By starting
application security testing early in the software
development lifecycle for internet applications,
banks can lower the risk of malicious attacks
on their systems without significantly increasing
costs. By looking at the problem holistically,
banks can understand where innovation is
needed to achieve cost efficiencies without
sacrificing quality or increasing risk.
From a technology perspective, how have
you seen the demands of today’s banks
change over the years?
In the past, technology was about managing
the business – having enough information
available to make business decisions and
foster growth. Today, technology is about
enabling the business – aligning information
data, systems and processes with business
goals to support growth and manage risk.
Banks can no longer afford systems that
operate in silos or fail to provide the right
information at the right time. Customers see
their bank as a single entity and banks must
do the same by understanding all activity for a
customer across all channels, whether they are
visiting a branch, applying for a loan online or
monitoring balances via mobile banking.
One example of this trend is in the
area of enterprise risk management.
Before the market downturn, most
financial institutions thought the systems
in place provided an accurate snapshot of
mortgage exposures and risk.
Today we know that financial institutions
require more comprehensive and fully
integrated real-time views of portfolio risks
and there is a healthy need to shock- and
stress-test these areas for adverse, or
changing, economic conditions.
Unhealthy concentrations in areas such
as residential real estate, manufacturing
segments or retail segments continue to put
banks at risk. Most banks still lack the tools or
technology to capture risk exposure across
the entire enterprise accurately. Credit, market
and operational risk management with robust
predictive modelling, model valuation, loss
forecasting and stress-testing applications are
guaranteed to be critical banking solutions in
the next few years.
How strong is the need for institutions
to find a partner, rather than just
another vendor, who can help implement
a transformational approach to their
outsourcing and offshoring requirements? How have you seen this process change?
Capgemini partners with some of the
world’s largest financial institutions and holds
some of the longest and largest outsourcing
relationships in financial services. With close
to 20 years of experience in outsourcing and
offshoring, we witnessed the change from
a model that focused primarily on labour
arbitrage – shifting tasks from high-cost to
lower-cost regions – to one that focused on
process management and efficiency.
Today, outsourcing offers a much richer
array of choices for providing services. It has
transformed business processes and the
management of entire functions, allowing
businesses to focus on what they do best
while realistically assessing which processes
are better left entirely to an outsourcer. Be
it customer service functions, finance and
accounting processes, specialised business
processes such as payments, loan origination
and servicing, mortgages or settlements,
financial institutions need more than simply
a vendor for this type of work. They need
partners with deep domain expertise, clear
innovative capabilities and the ability to provide
flexible solutions that are scalable to varying
market conditions, in order to derive the most
value from outsourcing relationships.
Some financial institutions are far along
the outsourcing lifecycle and have their own
captive centres in low-cost countries such
as China and India. They look to partners
to do more than simply deliver services
and solutions based on SLAs. We continue
to work closely with our clients to put
business needs first. We share our successful
processes for relationship, communication,
and risk and resource management to help
our clients understand how to outsource
effectively. We work with client captives as
partners, not competitors, to make sure
that client outsourcing efforts are successful.
We understand that true partnerships are
transformational, and transformation requires
understanding your partner’s business.
How fast is interest in Capgemini’s
solutions growing? Who are your main
customers for these types of solutions?
The financial crisis drove a substantial
amount of interest in three areas: customer
retention and services, process efficiency and
cost reduction, and risk management and
regulatory compliance.
These areas draw heavily on business
information management, including data
management and business intelligence
solutions, which are critical for financial
institutions.
In addition, insurance is a strong growth area
for us – in property and casualty insurance, and
in life and pensions, where insurers are making
significant progress with policy administration
and transforming claims processing.
We are also seeing interest from banks
in green IT offerings, specifically paperless
document management. Our experience
with FileNet and other large global financial
institutions has helped us build a solution that
can be leveraged across multiple geographies.
We helped a global insurer capture and
digitalise paper copies into electronic media.
The initiative included identification and easy
retrieval, optical recognition, 2D and 3D
barcode recognition and retrieval services,
and helped our client break even on their
investment within 12 months.
Lastly, with the tremendous consolidation
of our industry over the past year, we’ve been
successful with post merger and acquisition
integration. We’ve helped financial institutions
gain the benefits of combined operations
quickly, maximising the results of due diligence,
and helped our clients manage the rough
patches associated with large-scale integrations.
We understand you’ve put together a
series of World Reports, ranging from
aspects such as retail banking through to
managing mortgage profitability. How have
they been received?
Capgemini Financial Services publishes five
annual World Reports covering four segments
of financial services: insurance, retail banking,
wealth management and payments. Each
report reviews yearly trends and spotlights
topics of interest in that particular year. For
2009, all five World Reports covered insights
in light of the economic downturn of 2008.
The spotlight for the World Retail Banking
Report 2009, published in partnership with
UniCredit and EFMA, looks at managing
mortgage profitability.
The World Wealth Report from Capgemini
and Merrill Lynch, now in its 13th year,
focused on the impact the financial crisis
had on high net worth individuals and their
changing asset allocations as a result. The
Asia Wealth Report followed with a similar
focus on the Asia Pacific region.
The World Insurance Report covered
trends in multi-distribution models as a
method for fostering growth in a tough
market and, finally, the World Payments
Report, presented with RBS and EFMA,
reveals how global transaction services
divisions serve as a stable and profitable
source of revenue during weak economic
conditions, and looks at achievements
towards the implementation of SEPA.
Our clients tell us that Capgemini’s
World Reports provide valuable insights
into industry trends and showcase tangible
initiatives that can increase profitability. The
reports – and the workshops we hold on the
findings – help clients focus their own efforts
and turn insights into actions.
How do you see the technology
requirements of banks evolving in the
years to come?
Banks will continue to use technology to
better service customers by providing
information and access anytime, anywhere.
As technologies change and new ways of
operating emerge, we’ll see banks continue
to innovate to build customer loyalty and
automate processes without increasing
costs. We’ve recently partnered with
Pegasystems on its SmartPaaS offering.
This platform-as-a-service offering allows
banks to develop and deploy dynamic
business applications rapidly with all the
benefits of cloud computing. This offering
includes frameworks for investigation and
financial crimes management that helped
one bank lower processing labour costs for
investigations by 33% and financial crimes
management by 40%. As technologies
change, we’ll see more innovations
that change the way banks do business,
and these will drive more costs out of
the banking model to allow increased
profitability and stability.
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