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The future of successful companies in the financial services sector will be based not just on the delivery of excellent customer service, but also on organisations' ability to provide unique and personal customer experiences.
But as banks, building societies and insurance companies invest significant time and effort building customer facing organisations and developing customer-led strategies, they should not ignore the very real need to ensure that new systems and applications allow them to deliver services and products to promise. An element of this is to protect business processes in a disaster.
As part of this many companies have, until now, focused their efforts on Business Continuity and Disaster Recovery. This normally involves investing in a third party service to help pick up the pieces once a disruption to service delivery has occurred. Since the events of September 11 the profile of such services has never been higher. But for any company even slightly dependent on IT these services alone are no longer enough.
It has become glaringly apparent that there is no point in investing in business change, new channels to market and new business processes if an organisation is incapable of providing a service to its end customers 24 x 7. For that reason, Business Availability (BA), which ensures the protection of critical environments, infrastructures and integrated technology at every level, is now a strategic issue for the board of any large financial services organisation.
Spotlight on financial
But a retail bank is not forgiven for failing to make a credit card payment or account transfer when instructed to do so. An insurance company is not forgiven for losing all of the paperwork about a claim. And a wholesale bank is not going to win friends by failing to guarantee security on global transactions.
Financial institutions are also under more of a spotlight than other types of business. Recent issues such as poorly performing or insecure web portals and endowment mis-selling have not helped to galvanise public confidence in the sector. The banking business has specific legislation to deal with, such as the recommendations of the Basle committee, as well as influential thinking about corporate responsibility introduced by the Turnbull Report.
All of this means that banks and insurance companies risk running out of goodwill. They cannot afford to gamble brand reputation further through failing to prepare a BA strategy that works.
But the banking industry is already rolling the dice according to the Pressure Point Index (PPI) - a pan-European survey completed by Synstar in September 2001. The ongoing survey, which looks at the IT issues facing organisations across Europe, reveals that the banking industry suffers significantly more downtime than any of the five industries surveyed - averaging 36 hours a month. The next biggest was the public sector at five hours followed by the insurance industry with seven hours. The other industries surveyed were retail and telecommunications.
Turbulent times for the
financial services industry
But today, traditional routes to growth; notably mergers and acquisitions - are fast turning into blind alleys as governments block larger players from taking over their competitors.
At the same time, traditional high street institutions face new competition from other domestic overseas banks and insurance companies, as well as from 'big brand' non financial services organisations aiming to become lifestyle companies. These no longer need to build a physical infrastructure to deliver competitive products to UK customers.
UK institutions are also struggling with their own new channels to market; not just in terms of marketing new services, but also in integrating customer information captured in different parts of the business.
Stronger competition for customers - coupled with emerging legislation that forces banks to make it easier for customers to 'change horses' - has created unprecedented and difficult market conditions for financial institutions.
The role of technology
The next stage of e-business involves a period of consolidation. Financial services companies are now in the process of integrating customer information across channels, and linking customer relationship management (CRM) systems with back office processes to deliver a much more accurate view of customer preferences and behaviour.
All IT-related activity in the financial services sector is now channelled towards using technology to become more customer-centric. The focus is now clearly on delivering products and services that customers want and need at particular stages of their lives. Banks know they can not continue to focus on the sale of products or services that make them the most short-term profits as this will fail to achieve the Holy Grail of customer loyalty.
Financial services companies must start by thinking about their customers first to see where the application of technology can help provide the best service. Real empathy with real life problems and poor experiences will be the key to building a profitable business in the future, because customers now have more freedom to self-select services from businesses.
Financial services companies also need to understand that consumers are looking for products and services that truly add value. Customers are tired of cynical marketing ploys that appear to add value, yet punish them in other ways; such as low rate mortgages that lock borrowers into inflexible and expensive arrangements for the next decade.
So the idea of a 'take it or leave it' set of products and services has disappeared forever. And as products from financial institutions approach commodity status, it's going to be vital for banks, building societies and insurance companies to apply technology to deliver added value services that make a real difference to customers.
Why Business Availability?
Many of those ongoing problems, such as poorly targeted marketing campaigns and lack of understanding about individual customer histories, are being addressed through data consolidation programmes. But the internet effect added a further dimension to financial services.
For the first time customers interact directly with institutions' IT systems; via mobile commerce, via web portals, or by using interactive voice recognition (IVR) systems.
This kind of self-service facility creates new problems for companies that offer on-line, automated or mobile services to customers. In the past, it was clearly important to address business continuity issues. But in those days banks and building societies could still function, even for a few days, without their IT systems if they failed.
So life for financial institutions in today's 'm' and 'e' enabled world can be difficult. Customers expect to be able to deal with their bank via a number of different channels at any time of the day or night. If they have chosen a bank because it can provide this level of service, they will clearly be disappointed if channels are unreliable or unavailable on a regular basis. And if a close competitor can provide the same basic products but also delivers service levels to promise, then it won't take a great deal of prompting to get that customer to change banks.
It's not just inbound communications that a financial services institution needs to safeguard. Consider the effects that system downtime have on a contact centre, for example. Customer contact staff need immediate access to customer histories, recent agreements, account information and promotional offers relevant to individual customers.
So massive investment in new technology is wasted if organisations fail to think beyond basic business continuity (that is, keeping the business running behind the scenes) to develop a Business Availability strategy (ensuring systems and information are available at the point of use).
Financial services companies operate at the heart of the economy, so it's clearly important that they lead the way with Business Availability. Yet despite the clear logic behind Business Availability, the majority of financial services companies are failing to address what has become their greatest risk.
As well as the risk of disappointing individual customers who may take their business elsewhere, financial services companies face the extra risk of damaging their brands over the longer term.
It's no longer just customers who criticise a company for bad service. Shareholders too are now increasingly vocal and knowledgeable about how well or badly companies are applying technology to solve business problems. During the e-business boom, Dixons understood this issue only too well. The launch of Freeserve reassured the market that Dixons was not only on top of the e-commerce revolution, but was taking the right steps to harness 'e' for the good of customers and shareholders.
So financial services companies need to be able to demonstrate a responsible and pragmatic approach to new technology and channels to market that work.
And when putting together a business case for the implementation of a BA strategy, organisations also need to take account of the longer-term effects of service interruption.
Synstar's analysis of the market shows that there is a direct and disproportionate correlation between the length of time it takes to get the business back up and running and business recovery. Businesses that leave it too long to get back up to speed run the risk of never regaining their original market position.
This brings a new dimension to the evaluation process. Companies need to understand not just the level of investment required to ensure BA, but also the medium and longer-term effects of not delivering the services promised to customers.
First steps to Business
1. What services do we need to deliver to the end user and the end customer?
2. Which parts of my business are involved in actually delivering these services?
3. What internal or external events are likely to affect the delivery of services?
4. What situations may cause these events?
5.How do I protect my business processes should those events occur?
What stands between financial services companies and a BA strategy?
There are a number of perceived barriers that must be overcome by financial services companies who are developing a watertight BA strategy.
1. We already have SLAs in place with our IT vendors
2. The cost of Business Availability is too high
3. We can't justify the cost of BA services to the board
4. We don't have the skills in-house to juggle all of this
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