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Top 10 ceo level concerns in banking
Top 10 ceo level concerns in banking
Top 10 ceo level concerns in banking
Top 10 ceo level concerns in banking
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Top 10 ceo level concerns in banking

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Dash Board Analytics - CEO's Concerns

Dash Board Analytics - CEO's Concerns

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  • 1. Retail Banking1) Competition from non-banks. With increased competition from brokerages, insurers, non-banks andglobal players, banks are focused on finding ways to attract and retain profitable customers. This mayinclude new marketing efforts, branding changes, modification to existing products and/or pricing structures,improving customer service, expanding product reach, partnering where appropriate to offer value-addedservices, etc.Efforts may also include identifying profitable segments of customers, specifically high net worth individuals,in order to provide higher levels of service to ensure that they retain and expand these relationships. Moredrastic steps may also be taken in the form of, for example, acquiring other banks to increase market shareor create economies of scale.2) Integrated channel delivery. Banks typically have a confusing array of delivery platforms to servicecustomers at the branch, teller platform, ATM/kiosk, Web site, call center, telephone bank, etc. There areinevitably numerous databases and systems in place to support these activities. Banks are investing inconsolidating their delivery platforms to create a more cohesive solution that better serves customers andmakes maintenance easier from an internal perspective.3) Product silo integration. Historically, banks have multiple silos that operate essentially independently,with little knowledge of what other silos are working on. Frequently, banks cannot identify whatproducts/services their customers own/use at an aggregate level. Banks are working furiously to developsystems that allow them to see customers entire relationship in order to service them better and targetthem with complementary products/services.4) Improving automation. Banks have the opportunity to reduce costs and improve the bottom linethrough changes to underlying technology and workflow enhancement. These improvements may beeither internal or external. Internally, banks may streamline numerous tasks, including procurement,expense reporting, data sharing, etc. Externally, banks are putting self-service solutions into place that mayautomate many processes. For example, online applications that feed data directly into back-office systemscan streamline the process, obviating the need for re-keying of information.5) Creating a sales-oriented culture. Often banks pass up excellent opportunities to expand customerrelationships and sign on new customers. Each of the delivery channels can be used to take betteradvantage of these opportunities. For example, customer service representatives should be attempting tocross-sell products and services on incoming calls, not only outgoing ones. Banks that have a full view oftheir customers wallets should use this information to target customers online with complementaryproducts. Leads coming in from the Internet, or other channels, must also be effectively distributed to theappropriate group within the bank. Even branch and teller personnel would benefit from having bettercustomer information, by being able to sell more effectively. In addition to the contact management andanalysis systems needed for this enterprise-wide sales approach, these changes will require altering theexisting culture and providing training.6) Global influence. With increasing globalization, banks are faced with more threats from outsidecompetition, but also have additional opportunities. They must seek to enter new markets, creatinglocalized products and services in each. Banks may also consider the benefits/drawbacks of co-competition.Through joint ventures and partnerships, banks may look to third parties to provide additional distributionavenues and reduce costs on the technical side through shared resources.7) E-commerce strategy. Closely tied to integrating product silos and channel delivery, banks continue toevaluate their e-commerce strategies. Understanding the potential of the Internet and harnessing it tocreate positive ROI streams are two very different things. Banks must develop new strategies and continueto develop ways to use the Internet and wireless channels either to reduce costs, to increase revenues, toimprove productivity or provide some other value proposition.Author: Partho H. Chakraborty
  • 2. 8) Economic impact on credit portfolios. Banks worry about the impact any economic downturn will haveon their bottom line. Within retail banking, this includes managing their outstanding credit portfolios. Clearly,banks will have to deal with increasing defaults by customers. They may consider tightening existinglending policies.Under this issue also falls strategies to attract and retain customers, especially mass affluent customers, asdescribed above.9) Contingency plans. Contingency plans have always been an important aspect for banks. However,they are now re-examining existing policies, procedures, and systems that they have in place. Banks willinvest in new disaster recovery and back-up systems as necessary and redefine procedures to ensure theyare adequately positioned in case of new types of emergencies. This is one form of managing risk.10) Security and privacy. Banks are eager to strengthen their position of trust with their customersthrough educating them about new privacy policies, but more importantly through offering improvedsecurity. Banks are likely to improve security measures for those transactions initiated via the Internet andwireless devices. This effort extends not only to positively identifying the end user, but also ensuring that allbank systems, both Internet-related and not, is invulnerable to attack.Wholesale Banking1) Globalization. Competition within a domestic market is no longer enough for most aspiring banks.European banks have been the most aggressive on this front, especially lately, with a wave of acquisitionsin the US market. Expansion of products and services into foreign markets has become unavoidable asadvancements in communication technology have eliminated numerous barriers to internationalcompetition in the wholesale banking business.2) Risk Management. Somewhat related to the first issue, as a bank expands its territorial reach andprovides an ever-increasing number of products and services worldwide, to ensure healthy growth it mustalways be vigilant regarding its risk levels. Risk management must occur across product lines anddepartments, and not be isolated to independently operating silos.3) Straight-Through Processing. Similar to the securities market, there is a growing emphasis on straight-through processing of payment and other wholesale banking transactions. Achieving STP will eliminate theneed for manual processing and re-entry of transactions, which in turn will reduce potential for errors andcredit risk.4) Integrated services. As leading banks become increasingly global in their scope, providing corporatecustomers with an integrated suite of electronic banking services that combine cash management, foreignexchange and potentially trading and custody services into one seamless offering will become a majorcompetitive differentiator.5) Small business banking. By utilizing new media (e.g., Internet, wireless, etc.) for distribution andcommunication, banks can go beyond their traditional large corporate clients and provide a comprehensiveline of products and services specifically designed for small businesses. Historically, the small businesssegment has been largely ignored by large banks and typically treated as retail clients. This fairly lucrativesegment can now be reached and serviced far more easily.Author: Partho H. Chakraborty
  • 3. 6) Countering the threat of disintermediation. The development of electronic commerce is bringing notonly new opportunities, but also new competitive threats to banking institutions. As commercial transactionsmove to the Internet in increasing volume, banks will have to be vigilant against threats to their traditionalcentral role in the corporate transaction chain. For example, new non-bank companies are emerging toprovide payment clearance services for electronic marketplaces and exchanges. In the area of internationaltrade, Internet-based trade finance services are being developed that will compete with banks at everystage of the trade finance process, from the extension of credit, to documentary services, to secondarytrading of assets. Similar e-commerce initiatives will emerge in corporate finance, debt finance, loansyndication and similar high-stakes corporate banking fields. Banks will be challenged to developinnovative strategies of their own to counter these emerging competitive threats.7) Employee portals. As organizations become increasingly global, the need for efficient internalcommunication becomes more vital. The establishment of employee portals enables employees to sharecommon corporate information regardless of where they are, strengthening corporate identity. Employeeportals are composed of knowledge management systems, content management, business intelligence,and collaborative workspaces, which can be used to drastically improve productivity within an organization.In addition, employee portals extend outside the organization, allowing collaboration between employeesand business partners. For example, this is particularly important in a mergers & acquisitions deal, whendocument sharing becomes a vital part of the process.8) Security and privacy. Banks are eager to strengthen their position of trust with their customers througheducating them about new privacy policies, but more importantly through offering improved security. Banksare likely to improve security measures for those transactions initiated via the Internet and wireless devices.This is especially necessary for the high-value transactions that pass through corporate banking systems.This effort extends not only to positively identifying the end user, but also ensuring that all bank systems,both Internet-related and not, is invulnerable to attack.9) Improving automation. Banks have the opportunity to reduce costs and improve the bottom linethrough changes to underlying technology and workflow enhancement. These improvements may beeither internal or external. Internally, banks may streamline numerous tasks, including procurement,expense reporting, data sharing, etc. Externally, banks are putting self-service solutions into place that mayautomate many processes. For example, online applications that feed data directly into back-office systemsstreamline the process, obviating the need for re-keying of information.10) Creation of an e-commerce strategy group. The days of secretive in-house technology innovationsare long gone. It simply does not make sense for banks to commit the capital and man-power to keep upwith the rapid commercialization of cutting-edge technology. Instead, most firms have resorted to creating aseparate group responsible for creating and supporting company-wide e-commerce related initiativesthroughout the organization. Product-specific or department-specific technology development does notmake economic sense for large wholesale banks. Instead, all product lines and departments must worktogether so that a newly developed technology solution in one area can be fully leveraged to support theservices of other areas. These e-commerce groups will also cooperate with other firms, even competitors,to identify and nurture certain products and services produced by third party software/hardware vendors sothat the cost of developing cutting-edge technology can be spread across the industry evenly.Author: Partho H. Chakraborty
  • 4. Note: Names if any, are Suggestive only and without any relation to any real entity whatsoever. It is only to give a feel and touch of how transactions can be structured and names are indicative This article is meant for education purposes only and it is not be reproduced for any commercial purpose by print or electronic medium whatsoeverThis case study is written by:Partho H. ChakrabortyA - 305, DSR Spring Beauty Apts., 124/1, ITPL Main Road, Brookefields, Kundalahalli, Bangalore - 560037, IndiaTel: +91 80 420 50293, Cell: +91 99863 22504email: parthohc@airtelmail.in; parthohc@rediffmail.comSkype: parthohc01Author: Partho H. Chakraborty

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