But if the goal of integrated customer information has long proved elusive, the pressures to get it right are mounting for banks.
For most large financial institutions, retail-banking customers are a key source of revenue. These days, however, it’s a source of revenue that threatens to dry up. In North America in particular, attrition rates are high. In the US, 14% of customers defect each year, and 11% in Canada, according to Celent. What is more, replacing lost customers is an expensive business. It typically costs at least $200 to acquire a new account.
One solution is to reinvent the branch to make it more customer-focused, and the savviest banks are doing just that.
Today, bank branches are seeing a fall in transactions as customers turn increasingly to ATMs and the internet for routine tasks. But customers do still visit a branch when they are taking complex financial decisions, and many banks are now reorienting their branches to address this shift in behavior. Celent has found a correlation between loyalty and profitability and the number of products a customer has: the customers with the most products turn out to be both the most profitable and the most loyal. So a key goal of the reinvented branch is to strengthen ties with existing customers by selling them additional products.
It means retraining, empowering and motivating staff, and instilling a customer-oriented sales culture. “Banks are paying increased attention to their customer relationship strategy,” says Bart Narter, a senior analyst at Celent. “The epicenter of the forward-thinking bank is the place where people, technology and business processes intersect.”
On the technology front, customer data integration (CDI) is key. Without a single view of the customer, effective cross selling can’t take place. Fidelity National Information Services (FIS) and Sun Microsystems are addressing the issue with a solution that unites CDI technologies with service-oriented architecture to enable banks to aggregate and cross-reference customer information from many different sources. The loosely coupled SOA framework provides a way to link silos of product information, maintaining consistency in real time. With such an approach, banks can rebuild infrastructure piece by piece.
“The single view of the customer has long been a problem for banks,” says Fidelity’s Gautam Pasupuleti. “Many banks want to offer dynamic product packaging, where they look at a customer’s accounts, history and profitability and, based on that, recommend a new product package. But decisions like that can only be made if you have a complete view of the customer.”
Based on Java 2 Platform Extended Edition (J2EE), the FIS solution is made up of the Universal Customer System (UCS) and Xpress Enterprise Services (XES), the middleware layer that enables the SOA. These two product suites work together to separate business functions such as a “funds transfer” or “withdrawal” from the core-processing systems and to expose core banking functionality as generic services, based on open standards. New England-based Webster Bank has recently successfully introduced Fidelity’s XES layer as part of a wholesale channel and core-processing system upgrade.
“If one bank acquires another and they have different systems for, say, checking, there will be a huge disconnect, with customer service representatives having to look at multiple screens until they replace one of the systems,” says Pasupuleti. “With our software, there is no disruption, because those business services can connect to multiple core-processing systems, until you do the replacement. The front end is never affected: there is no dependency between channel and core-processing applications. That is a huge step forward.”
Other vendors address the CDI issue but, typically, with proprietary
point solutions. By contrast, Sun and FIS have worked closely to
provide a pre-integrated offering that makes the most of the features
of Sun’s Java Enterprise System (JES) middleware stack. “The advantage of JES is that it brings together a standards-based business process workflow and web services solution with a single sign-on identity management and multi-channel portal interface supporting a wide range of end-user clients,” says Java architect Ramesh Nagappan. “All the features are based on Java and industry standards; they allow portability and interoperability, which is vital for a CDI application in a bank.”
Adds Ben DuBois, financial services business development manager at Sun: “CDI
solutions typically are multiple-vendor, multiple-point solutions that require
a lot of testing and integration. If you want to upgrade, it’s a
question of ‘Is this ID piece compatible with this web server?’, ‘Will this application server work with this data-mining software?’ With JES, the pieces come pre-integrated, tested and certified: you know they are going to work. This drastically reduces the bank’s cost of implementation. And you have end-to-end security built in.”
For its part, FIS seeks to differentiate itself from competitors on the basis of its built-in synchronization, so that when details such as a customer’s address are changed in one application they are updated throughout the bank’s systems. The overall FIS approach is different too. “Many vendors tackle the CDI problem from an infrastructure perspective,” says Pasupuleti. “We look at it from a business perspective. We offer a complete business solution for managing customer data, decision-making, profitability and so on. UCS is just one piece of that puzzle.”