Volatile Market Conditions Call for New Tech Strategies
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Volatile Market Conditions Call for New Tech Strategies

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Financial services firms explore new network technologies and partnerships to address governance, risk and compliance, improve customer service and increase revenue.

Financial services firms explore new network technologies and partnerships to address governance, risk and compliance, improve customer service and increase revenue.

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    Volatile Market Conditions Call for New Tech Strategies Volatile Market Conditions Call for New Tech Strategies Document Transcript

    • TECH DOSSIER > VOLATILE MARKET CONDITIONS CALL FOR NEW TECH STRATEGIES 1 of 6Volatile MarketConditions Call forNew Tech StrategiesFINANCIAL SERVICES FIRMS EXPLORE NEW NETWORK TECHNOLOGIESAND PARTNERSHIPS TO ADDRESS GOVERNANCE, RISK AND COMPLIANCE,IMPROVE CUSTOMER SERVICE AND INCREASE REVENUE EXECUTIVE SUMMARY Financial services firms ranked customer satisfaction, regulatory compli- ance and revenue growth as top priorities in a recent study by IDG Research Services. At the same time, those critical goals were reported to be some of the most challenging to achieve, though respondents overwhelmingly pointed to using technology to narrow the gap and achieve business goals more easily. This paper explores how these findings can be put to work— creating a state-of-the-art network infrastructure with the help of a services partner—to propel financial institutions to success in today’s competitive business climate. Banks, credit unions, investment firms, mortgage brokers and insurance companies understand that keeping their eyes on business priorities in a changing, competitive landscape is key to their sustainability and, more important, their success. But what are those priorities, and how close are financial firms to cashing in on them?
    • TECH DOSSIER > VOLATILE MARKET CONDITIONS CALL FOR NEW TECH STRATEGIES 2 of 6 Setting Sights on Success Must-See Resources The IDG Research Services study substantiates these concerns. Respondents in the financial Check out these resources, sector reported that the following are key busi- geared directly to IT and business ness goals for the next one to three years: leaders in the financial services Improving customer satisfaction (cited industry. You’ll find informative by 67 percent). Credit unions and other small videos, case studies, product and institutions continue to capture consumer service information, and more to deposit and loan business from large retail help you make the most of your institutions in the wake of recent upheaval in network investment. the financial sector. To stem this shift, finan- cial institutions are studying ways to improve customer relationships through new services. Maintaining regulatory compliance In late 2011, IDG Research Services (cited by 67 percent). Financial services firms surveyed technology leaders in the financial must comply with standards and laws that services industry to better understand their affect all organizations, such as Sarbanes- goals and challenges. The results mapped Oxley, Graham-Leach-Bliley, PCI Security closely to three overarching business priorities Standards and the Patriot Act. The Dodd-Frank that define the current state of the industry: Act, the latest in a string of new regulations, increased competitive pressure, improved focuses on consumer protection in the wake of customer experience across channels, and the mortgage meltdown. Internationally, firms increased need for governance, risk and must deal with the EU’s Solvency II and Basel II/ compliance (GRC) management solutions. III regulations. This myriad of requirements can The state of the industry is one of transition. be difficult to manage. Firms are recognizing consumer dissatisfac- Growing revenue (cited by 65 percent). tion with traditional banking, as the recent A majority of respondents placed consider- economic turmoil has spurred distrust across able importance on growing revenue as well the financial sector. Banks are working to as business process improvements, product/ address the spread of emerging payment service innovation and adapting to change. All methods outside the banking sector, a new of these goals are symptomatic of increased source of both competition and opportunity. competitive pressure in the industry as the Additionally, savvy consumers are seeking traditional consumer relationship erodes. an unprecedented level of access to financial Survey respondents also indicated that information through online media and, more lowering operational and capital costs remains recently, mobile devices. A recent study a concern. reported that 32.5 million users accessed mobile banking services in June 2011, up Overcoming Business 21 percent from Q4 2010.1 At the same time, Challenges many executives worry that the regulatory When asked which goals would be most chal- environment has become more complex lenging to achieve, the survey respondents and burdensome.2 identified nearly the same issues as their top In the end, financial services firms must concerns—addressing revenue growth, regula- balance their goal of serving and retaining tory compliance and customer demands— customers against increasing costs and lower revealing a disturbing gap between what’s margins—by no means an easy feat given the important and what’s truly feasible given the hurdles before them. current state of the industry. Why is achieving these goals so difficult? Limited staff resources, growing compliance costs and reduced IT budgets hinder firms’ 1 Mobile Banking App Usage in the U.S. Increases 45 Percent from Q4 2010 (press release). ComScore. October 2011. ability to invest in or deploy new solutions. 2 There is an emotional component, as well, as 2012 Global State of Information Security Survey, PricewaterhouseCoopers, CIO magazine, CSO magazine. respondents cited cultural resistance to change
    • TECH DOSSIER > VOLATILE MARKET CONDITIONS CALL FOR NEW TECH STRATEGIES 3 of 6 Hear it from the Customer unanimously agreed that effective unified Sun National Bank voice, data and network management solutions are critical to their firms’ success. These results provide clear insight. First, financial services firms’ highest-priority goals are also the hardest to achieve. Second, tech- nology is the path toward solving those issues. Find out how Sun National Bank benefited by choosing Century- Focusing on Core Link. This information-packed Operational Concepts video details valuable features and So what can financial services firms take away measurable benefits. from these findings? Achieving competitive advantage can be a simple matter of focus— specifically, zeroing in on the areas that address inside the organization as another hindrance not only the most important goals but also (see chart #2). In fact, survey respondents the biggest challenges. These areas translate indicated that some IT projects do not meet precisely to three core operational concepts: expectations due to problems in defining, serving current business and continuity needs implementing or supporting them—suggesting (primarily through governance, risk and compli- that the right technology, processes and/or ance [GRC] measures), staying within cost staff may not be in place to overcome some structures (by focusing on both operating and hurdles and successfully launch projects in a capital expenses), and addressing change (by timely manner. thinking about agility and future innovation)— all of which have technological implications at Putting Technology to the Task the underlying network level. The good news: These IT leaders agreed on the answer. At least three-quarters of respon- CONTINUITY: Simplifying compliance dents in the finance services industry said that management and minimizing risk. technology is a key or important enabler when In financial services, GRC is a fact of life and it comes to achieving their most important and tantamount to continuity. Technology must most challenging goals (see chart #3). be in place to ensure that sensitive data is Technology—and specifically a secure, transmitted securely, accessible only to autho- flexible network infrastructure—is essential rized parties, and protected both at rest and for enhancing operations. Overall, a robust in transit. Precautions must be taken to guard network infrastructure can provide efficiency against data loss—for example, encrypting for employees and convenience for customers. data on mobile devices to reduce the risk of That’s why these technology leaders nearly being hijacked, or requiring remote access CHART 1: Business Goals in the Business Goals Most Financial Services Industry Challenging to Achieve67% Improving customer satisfaction Growing revenue 66%67% Maintaining regulatory compliance Maintaining regulatory compliance 52%65% Growing revenue Improving business processes 52%61% Improving business processes Product/service innovation 44%54% Product/service innovation Improving customer satisfaction 38% Source: IDG Research Services, September 2011
    • TECH DOSSIER > VOLATILE MARKET CONDITIONS CALL FOR NEW TECH STRATEGIES 4 of 6 CHART 2: it to both horizontal facets of their work—as with finance and accounting, hiring and human What Hampers Achievement of Business Goals resources, safety regulations, and environ- mental compliance—and vertical facets of their Budget constraints (68 percent) work, depending on their industry.” 68% Resource (staff, infrastructure, etc.) constraints COST: Increasing operational efficiency 60% and creating new revenue opportunities. Budget constraints are one of the top Cultural resistance to change 43% reasons business goals aren’t achieved, so cost is a crucial concern. The goal is to reduce the Market uncertainty 42% percentage of total costs while still main- taining operational capabilities and increasing Oppressive/fluctuating regulatory environment efficiency. At the same time, IT must work to 38% identify how innovative technology can create new revenue opportunities that contribute to the bottom line.CHART 3: As one respondent to the IDG Research Services survey, working at a midsize bank, Where Technology Contributes to Business Goals noted, “In terms of technology and business goals, we’re really trying to make it easier Customer satisfaction for our clients to do business with us. We 87% are looking at a number of technologies to Regulatory compliance help optimize and improve workflow process 83% that may be very manual today, [looking for] opportunities to improve those processes.” Revenue growth 78% Toward that end, a robust network translates into a variety of new cost-effective customer- Business process improvements 88% service capabilities for financial services firms. For instance, firms can use videoconferencing Product/service innovation capabilities to provide on-site customers 80% with access to personalized service, instead Source: IDG Research Services, September 2011 of employing experts at individual branches or offices. They can even upgrade their call centers with state-of-the-art IVR and call- routing technology. through VPNs to ensure secure data transmis- sion. Technology is available to help financial services companies not only adhere to internal rules (as with partnership agreements) and Hear it from the Customer external regulations (as with industry or University Federal Credit Union government dictates), but also prove that they have done so. Increasingly, companies are seeing how governance, risk and compliance, along with the data access and control facets of security, are linked. A 2011 study by Hypatia Research Discover why University Federal noted, “GRC is complex. It represents three Credit Union chose CenturyLink. This inter-related activities for companies. … The engaging video explores the need for three categories, along with security, create a network redundancy and reliability, continuum that can encompass not only the ultimately achieved through Century- way a company presents itself to the outside Link’s nationwide presence. world, but also the way it conducts itself internally. … [C]ompanies are required to apply
    • TECH DOSSIER > VOLATILE MARKET CONDITIONS CALL FOR NEW TECH STRATEGIES 5 of 6CHART 4: results, the ability to track change through Where Managed Services business analytics is a big issue. Firms must Impact Business Goals be able to transmit data across the network and aggregate it quickly, whether it’s to Maintaining regulatory compliance improve flexibility and scalability or to conduct 77% rapid risk assessment on loans. As one survey Quickly adapting to changing needs respondent said, “We’re looking internally to 73% make sure that we’re making good decisions. Product/service innovation Are we loaning to the right folks? Are we not 72% denying loans to credit-quality clients?” It’s Improving customer satisfaction about differentiation. What products, solutions 71% and/or services are available that would make Improving business processes it worthwhile for clients to actually go through 71% the trouble of switching financial institutions? Source: IDG Research Services, September 2011 “The pain associated with moving financial institutions is something we’re looking at reducing,” he added. “There has to be a Think Big with ThinkGig compelling value-add. For most folks, it can be really painful to switch.” Managing Alternatives Still, the ideal network doesn’t evolve over- night. Small and medium-sized firms are Looking for an engaging discussion about the latest tech- unlikely—especially given their reported lack of nology trends? Visit ThinkGig, CenturyLink’s business blog, resources—to have staff resources with exper- specifically designed to serve IT leaders with thoughtful tise in networking and security technologies insights into the issues that keep you up at night. necessary to create a state-of-the-art network. For financial services trending, visit: What’s the alternative? A vast majority of respondents noted the potential opportunity of  Banking in Bed managed services in attaining business goals  We’ve Been Compromised! (see chart #4). Interestingly, these opportuni- ties map closely to financial services firms’  Weathering the Storm: Can Banks Regain business goals and, more telling, the issues Customer Trust? that make them difficult to achieve. By working with a network service provider that both And for general discussion regarding technology trends, understands the state-of-the-art capabilities of visit: www.thinkgig.com networks, as well as specific industry needs, financial services firms have a new option for staying competitive. Together, they can lay a CHANGE: Improving customer acquisi- foundation upon which business processes tion/retention and managing evolving can be run reliably, quickly and affordably. regulations. Change is constant in the financial services Partnering for a Better industry. That’s been evident in the past Network decade, and the next ten years may prove In an increasingly busy and complex world, equally disruptive. Financial services firms business executives have to be smart and must maintain the technological agility not only efficient with their budgets and resources. to deal with any new regulation, but also to Business continuity, cost management and adapt to increasing customer demands. This is constant change make choosing a service especially difficult because the segment deals provider that understands key issues and busi- not only with accessing data but also the time- ness drivers a prudent decision that can help sensitive ability to transfer funds and complete maintain the balance of stability and innovation transactions. at a viable cost. Based on the IDG Research Services survey Network service providers drive continuity
    • TECH DOSSIER > VOLATILE MARKET CONDITIONS CALL FOR NEW TECH STRATEGIES 6 of 6 pay a monthly or annual fee for which they can Can Your Network Service Provider Meet easily budget. Second, providers can introduce Your Needs? Key Questions to Ask state-of-the-art services, whether relating to security, compliance or bandwidth, that many  What are your specific business goals? companies cannot afford on their own.  Can your current network accommodate those goals? Finally, network service providers can  Are the capital expenses for supporting your network help companies innovate by always watching creating a budget strain? the horizon for technological shifts. They can seamlessly upgrade technology and services  Does your current staff have the expertise to deploy a so companies stay on the cutting edge of state-of-the-art network? network technology. Then, combining wide  How quickly could you marshal the resources necessary experience in new networking technologies to create a state-of-the-art network? with an understanding of the company’s business, they can demonstrate how such  How quickly can you accommodate requests for new technologies bring competitive advantage. customer-facing applications? And when the need arises, network service  How quickly can you address demands for increased providers can leverage their experience to compliance and security issues? deploy new applications within days or weeks,  How quickly can you handle requests for revenue- rather than months. generating applications? Building a Better Business If your answers to these questions raise concerns Strong network expertise benefits any industry. about your future competitiveness, contact However, industry knowledge is key—under- CenturyLink. www.centurylink.com/banking standing specific challenges and how those map to a company’s networking needs. In financial services, that means addressing highly reliable transaction systems, secu- through a reliable network that keeps rity and ATM networks. In retail, that means employees productive whenever and wherever offering PCI compliance, point-of-sale systems they need to work, and contributes to speed of and widely dispersed sales outlets. In manu- responsiveness, whether to customers, part- facturing, it means accommodating data ners or suppliers. They also offer expertise and transmitted from assembly lines, procurement focus on network infrastructure and services— systems and wireless RFID codes. technical issues that many companies don’t With its recent acquisition of Savvis, have the staff resources to master. They can CenturyLink offers a full portfolio of products, evaluate the company’s specific networking services and solutions that help companies and communications needs—whether make the most of their network investment. accommodating e-commerce transactions or That means companies enjoy quick time improving collaboration with branch offices— to market with services that address their and efficiently design a network that will best unique business requirements—no matter solve specific business problems. the industry. They can also manage and monitor the network once it is deployed, and help ease Bottom Line the burden of time-consuming activities such By focusing on key business drivers—control- as security audits and compliance reporting, ling costs, maintaining business continuity and allowing internal staff to focus on more stra- managing change in demanding, dynamic busi- tegic projects. Proactive network management ness environments—the right network service is the key, providing greater efficiency, higher provider, like CenturyLink, helps clients get the reliability and more productivity. most from their network dollars and focus on Network service providers provide cost their core competencies. advantages in two distinct ways. First, they reduce the need for capital investments in For more on what CenturyLink has to offer, network infrastructure. Instead, companies please visit: centurylink.com/banking. wp121979