Financial Services Industry prepares for shift of focus
The past few years has been a turbulent time for the financial services industry and as the global economy returns to growth leaders are adjusting their aims accordingly.
As the industry exits survival mode focus is being placed on driving value creation and taking the lessons learned from the tough times.
Herein lies the challenge for continuous improvement managers, who are being looked upon to provide business process solutions within an increasingly tough regulatory environment – which is set to see changes in some countries over the coming months.
This must be done with restricted resources and an eye on the current market trends, which will drive growth in the sector in 2011 and beyond.
Improving business processes through the leveraging of technology has long been a practice for those in the financial services, which is only set to increase.
Industry experts Gartner noted: "Today, companies are focused on the improved automation of tasks, such as underwriting, full case management to support end-to-end tasks, employee productivity tools, and process metrics."
Among the key technologies playing a part in boosting operations is master data management (MDM) software, which allows for the streamlining and convergence of data to provide a better service for increasingly demanding consumers and to support business processes.
Gartner predicts the market for such software will see a compound annual growth rate of 18 percent until 2014. However, the company said many of the IT departments implementing MDM will struggle to make investment cases, particularly if there are no "business-process-oriented metrics" to measure its success.
John Radcliffe, research vice president at Gartner, said MDM allows for "a unified view of existing data, leading to greater enterprise agility, simplified integration and, ultimately, improved profitability."
He added: "Unless organizations take a holistic, business-driven approach to MDM, addressing governance and metrics requirements in particular, they risk having their MDM programs fail."
Writing for CIO, Giles Nelson noted the advancement of technology within the financial services sector was part of the wider trend for speeding up business processes, but warned against firms speeding up processes faster than they can manage them.
"The aim is for the organisation to become more responsive — not only to detect aberrant behaviour as soon as it happens, but to try and predict when limits may be breached," he said.
Companies operating in the world's largest financial services centre, London, will be forced to deal with a number of regulatory changes being brought in by the coalition government.
As part of its aim to improve processes within the sector, the Financial Standards Agency (FSA) and Financial Ombudsmen Service are calling for changes to be made in the way firms handle complaints.
A consultation paper released in September outlined a number of steps it believes should be taken to ensure the correct handling of complains, which managers will have to align within current business processes.
These proposals included a requirement for firms to identify a senior individual in charge of complaints handling. It calls for the end of to a two-tier complaints system in an effort to promote issues being resolved the first time.
Another proposal asked for "underlining [of] the requirement for firms to carry out root cause analysis, by identifying and remedying any recurrent or systemic problems with complaints, and to take action where appropriate."
"Banks that undertook root cause analysis could proactively identify issues and act before they became more widespread," the consultation paper said.
The calls come following a review by the FSA which found poor complaint handling standards in many of the major banking groups. Following the review, five banks were required to make changes to their procedures, while two were referred for enforcement.