In recent years, the financial industry has witnessed a revolution. To discuss, debate, and seek a bit of consensus on the crucial issues impacting the industry, I met earlier this year in New York with a team of experts at the Electronic Trading Innovation Council. For the event, Cisco partnered with the founders of the council, Julio Gomez and Clay Booma. I was joined by my Cisco colleagues Aron Dutta, co-managing director for financial markets, Cisco IBSG; Chris O’Connell, Cisco’s head of strategy for alternative investment markets; and Dave Malik, Cisco’s technology & architecture lead. The other participants represented a wide range of financial and tech-based firms, including BNY Mellon, Citi, Credit Suisse, Lazard Freres, Morgan Stanley, Nomura, State Street, UBS, Equinix, Savvis, and Tervela.
It was a great team, and the roundtable meetings benefited from a vast body of knowledge and a high level of participation. Read More »
A colleague of mine with close to 30 years experience in financial services recently returned from a business trip to Kuala Lumpur where he attended a financial services CIO summit. One of the messages he heard again and again was the quest for simplicity.
The CIOs were looking for solutions that are not simplistic, but rather simple – simple to implement, simple to maintain and simple to use.
Not a new concept, but one we need to constantly remind ourselves of as we use technology as an enabler. Key lessons learned to keep in-mind include:
It’s not about the technology, it’s about delivering improved capability and business value
Get the users involved early and often
Ensure both the business and the technology sides are aligned
It’s about people, process and technology
The list can go on, but let’s return to simplicity. When we look at today’s distributed computing environment, it harkens back to the early 1990s when the battle raged between OS2 and Windows. We all know the result and now PCs, in a client-server architecture, rule the day. It is now becoming increasingly clear that the client-server environment is anything but simple which is why we are moving into a post PC era. I would argue that a critical part of this shift is the need to drive to simplicity.
A brief example may help paint the picture for you. We recently worked with a large European bank that was facing a far-reaching desktop operating system upgrade. To replace the old with the new would not have solved one nagging problem: it took over 20 minutes to boot up, sign in and start using a desktop. All the best intentions lead to increased complexity and a lot of lost productivity.
Do the math: 1,000 people signing in once a day lose a total of 333 hours of productivity every day. That’s 8 weeks of lost productivity in the first half hour of each work day. Transitioning to a virtual desktop environment, with Cisco Virtualization Experience Infrastructure(V XI) and services, brought the sign-in time down to seconds, not minutes, while simplifying overall desktop management, which ultimately helped increase productivity.
The challenges we face in today’s post-PC era include overcoming complexity, but as Edward de Bono says, “Dealing with complexity is an inefficient and unnecessary waste of time, attention and mental energy. There is never any justification for things being complex when they could be simple.” Now is the time to drive for simplicity.
Earlier in my career, I helped Wall Street find cutting-edge solutions to the radical challenges posed by the first great wave of computerization. Today, the changes shaking the financial industry are no less extreme, as firms negotiate the combined forces of globalization and regulation, while adapting to next-level technology that is lightning-fast, hypermobile, and reaching for the cloud.
Several weeks ago, at the 8th Annual High Performance Computing Financial Markets Show and Conference in New York, I outlined Cisco’s vision for the Global Connected Marketplace and the transformational shift in the consumerization of IT that it portends.
Lower margins resulting from both the commoditization of transaction economics and the high cost of supporting IT-intensive infrastructures are putting tremendous pressure on financial-market companies. This is causing many firms to rethink their business models to create new revenue streams—and reduce costs—across traditional functions such as pre-trade analytics, risk management, and post-trade reconciliation. These functions are now seen as critical business processes that can be “shifted and lifted” into a cloud-enabled service delivery model.
Key enablers of success will include the development of new cloud operating models and strategic sourcing capabilities delivered via networked services. This will provide financial-market companies with greater business agility, and a path for effectively shedding capital-intensive assets from balance sheets for re-investment in new innovations and for producing positive company valuations.
- The image that comes to mind is that of the ‘Tree of Life’ from the movie Avatar. Its roots connect all living beings and the planet itself in a network that keeps track of the health of the system and acts as a knowledge repository.
- Interesting fiction or a representation of what’s to come? Are we reaching a tipping point in the evolution of humanity where we as a species start adopting a holistic view in evaluating progress while becoming more conscious of the side effects of our success (resource depletion, pollution, etc.)? Can it be that we are finally reaching the mythical ‘Age of Aquarius’ -- one of human enlightenment?
- Today we are rediscovering this once lost idea of a connected universe. Primitive societies had a much more intuitive sense of connectedness compared to our modern scientific approach of dissecting the whole to single out its fundamental building blocks. In parallel, we as individuals in a community have also grown apart. In contrast, today we are witnessing an unprecedented linkage between humans and their living and non-living environment enabled by technology. Read More »
Earlier this week, I participated in the Financial Services CIO Summit, which brought together CIOs and other senior technology business leaders from global as well as regional financial services institutions to share insights on the industry’s evolution. The dialogue was rich, compelling, and creative. The leaders grasp the challenges before them and see solution pathways that will help their banks capture new opportunities. So what was on their minds?
Four main forces are driving change in the banking industry: 1) rapid technology development that is providing a new business reality; 2) increasing customer demands that require banks to rethink how they have historically approached customers; 3) heightened competition, not just among financial institutions, but from companies outside their industry; and 4) burgeoning regulation that will require banks to track and store data disseminated to customers, including text messages, emails, and other interactive forms of digital information.
Overwhelmingly, the CIOs agreed that their challenges are not about technology per se; they have a plethora of technology choices. Instead, the main challenge is how to apply technology to maximize business benefits. The role of the CIO is no longer to serve primarily as a transactional technology guru. Management now expects CIOs to identify business problems and apply the right technologies to drive new business and serve customers better—while at the same time helping the bank become more productive and cost efficient.
One of CIOs’ biggest challenges is serving new customer segments with tailored approaches. Banks want to appeal to the younger generation of customers in a more differentiated and adaptive way. Gen Y consumers expect banks to use the web, social media, interactive games, and ubiquitous mobility in their customer interactions. CIO Summit attendees agreed that they need to create greater brand presence in social media circles to stimulate conversations with this key customer segment regarding home ownership, retirement savings, and other personal finance issues.
For high-net-worth clients, CIO Summit attendees pondered two “virtual expert” scenarios based on two-way high-definition video: (1) utilizing virtual advisers in wealth management branches to broaden availability of subject-matter expertise; and (2) home-based solutions that enable clients to reach their financial advisers when it is most convenient.
The CIO Summit offered a glimpse at several great opportunities. To capture them, I think CIOs should consider three steps: 1) conduct research and analysis to identify and prioritize strategic options; 2) define the appropriate business architecture (business strategy, people, processes, and organizational structure); and 3) create the technology architecture that enables successful implementation.
Financial services CIOs face some interesting battles. However, they now have the opportunity to become even more business-critical to their organizations than ever before.
Over the past two years the payments industry has seen some fundamental changes in corporate and IT requirements. Combined with the increasing focus on cost, these factors are providing some serious business challenges to any organization operating in this environment. Read More »
What’s a CVO? A Chief Video Officer. A senior officer in your bank who is responsible for developing your video strategy, executing on that strategy and measuring and reporting its results. Read More »
I have to admit it, when I walk into a hardware store I usually need help. And I ask for it. If help isn’t readily available, I go searching for it, and I usually get frustrated when help is not readily available. So, what’s your threshold for finding help when your money is involved?
Research has shown that 70 percent of banking consumers will leave a bank branch and not return if they ask for help and it is not readily available. It’s called revenue leakage. If I don’t get help in the hardware store and get miffed, it’s inconvenient to drive to another store miles away. So, I’ll take the time to hunt down a person in that bright colored apron. But banking is different. With competitor bank branches in close proximity (or just a URL away), a miffed consumer simply needs to walk down the across the street or click to a different website. Help is moments away.
What happens when your customers request help on a specific financial product or service? Can you fulfill every mortgage, wealth management, small business lending request at every branch? Not in every branch. Do consumers expect this expertise in every branch? Yes. And they expect fast, personalized service.
Do banks want to fulfill every new product or service request at every branch….or channel? Of course, it part of building loyalty, building wallet-share, being a trusted advisor and, stopping revenue leakage.
Can banks afford to staff up every branch to deliver this level of service? Yes they can! But not in the traditional sense. Yes, by providing the customer with the right expert quickly and engaging with that expert eye-to-eye.
I’d venture to say, there is a 8 to 10 minute threshold from when the customer walks into the branch and an appropriate bank expert engages the customer. To meet this threshold, banks are leveraging technology to provide a remote expert using high quality video and audio to connect the customer with the expert and begin understanding and fulfilling the customer’s request.
The ability to dynamically find the right expert is key. And so is delivering the right experience with the remote expert. Customers visit the branch to talk and meet with people. Using high quality video and audio delivers the “in the same room” experience and the eye contact necessary for establishing and building trust. The ability to explore what-if scenarios on-screen and deliver documents for signature, accelerate the sales and decision process. Citizens Financial Group, Inc. is delivering this capability today in branches within four retail markets with a focus on mortgage and wealth management product and services.
Increase your branch staffing levels ? Yes, but do it without increasing branch headcount.
In my last few blogs I talked about the strategies that banks are currently taking to compete in the 21st century. Let’s prophesize a little and discuss what could become the ultimate retail delivery strategy in the future. Read More »
Innovation seems to be back on the menu for many of the leading Financial Services players in 2011. It is a different type of Innovation though: it comes with a sense of urgency and a need to radically transform the business. It has moved from the category of a “nice to have” to a “need to have”. Read More »
While there is a world of difference between a deck of 52 and a deck of credit cards, it is still wise to hold those payment cards close to the vest. A solid part of protecting those cards from prying eyes is ensuring your insurance firm is compliant with the Payment Card Industry’s Data Security Standard.
Is PCI compliance important to insurers? Every carrier CTO and CIO I have asked has said , “Yes, it is…and we are working on it now.” I’d venture to say, as with all compliance and risk management it is not a one-and-done effort, as regular reviews are required.
Today, April 14, 2011, Cisco announced its newest work in the area of helping companies across all industries comply with the PCI DSS 2.0 guidelines. And since the PCI DSS guidelines apply to all companies—including insurance—that transmit, process or store credit card transactions and cardholder information, I’ve recorded a video in which I discuss the PCI DSS standard and its applicability to insurance.
Cisco is at the table with its customers when it comes to enabling PCI compliance and is an active member of the Payment Card Industry Securities Standard Council’s Board of Advisors. We completed a new Cisco Design and Implementation Guide that includes 30+ Cisco and technology partner products that have been examined by an auditor.
Technologies involved in the assessment include core routing, switching and wireless, plus collaboration and physical security technologies.
In last week’s blog, Bank Branches – “News of my death has been greatly exaggerated”, I argued that bank branches are not only thriving, but are the foundation customer interaction channel for most retail banks and that video will be the enabling technology to reinvigorate and reenergize the branch. Read More »
As I think back to the turn of the century, I remember banking analysts, as well as technology luminaries, were all boldly predicting the demise of not only banks in general, but of the bank branch in particular. Their mantra was, “turn bricks to clicks”. According to their view, consumers were going to abandon the branch in favor of alternative channels such as contact centers, ATMs, the Internet and, more recently, mobile devices.
After years of working with financial markets firms around the globe I believe we are heading towards an environment where “High-intelligence trading” will likely replace “High-frequency trading”. Why, because low-latency is becoming table stakes in the search for competitive differentiation. A firm’s business advantage is going to be in the ability to operate on a global scale and process more complex information sets. So in today’s markets, it’s not just speed — but span of awareness that counts -- in a search for Alpha. How do firms evolve to “high-intelligence trading” infrastructure ? Read More »
