Kristin R. MoyerAlistair Newton here. I met with a group of bankers last week, and in the course of a conversation one of them made it clear their concerns over current attempts by banks to cut costs. Too often he said, banks’ attempts to drive operational efficiency simply have a negative impact on the level and degree of customer service that those institutions were able to offer their customers. Projects tasked with delivering operational efficiency too often focus on deploying new technology or embedding new business models, with little or no thought for the impact on customers. These projects can too often aim to deliver short-term efficiency savings in terms of bank processes, but in fact actually succeed in distancing customer-facing staff from the data and information that they need to make decisions. In today’s climate, those customer-facing staff need all the help and assistance they can get to ensure that they can offer adequate advice to customers requesting or needing help.
So will bank desires to deliver short term, internal efficiency savings lead to longer-term problems? I think the answer is undeniably yes, and those problems are already on the horizon. We’re already seeing deep budget cuts across the board for many financial services institutions, with opportunities for cost efficiencies being prioritised above longer term investments. We are also starting to see some fairly forthright – some might say cynical – leveraging of pricing by banks in an attempt to maintain or at least bolster, their profit levels. The idea that their customers represent the future well-being of the bank seems to have been lost on many institutions in the rush for survival.
Gartner has already written extensively on the dangers of such short term approaches – investment to deliver cost efficiencies must take account of the impact on the entire process chain. Does your institution fully understand the real impact of centralising a certain process, or deploying a new piece of technology aimed at cutting cost ? Banks need to spend more time exploring and quantifying the longer-term financial impacts of their efficiency savings – if they do this, many could well end up discovering that the short-term budget saving for 2009 could end up costing them a lot more than they had bargained for in the coming years.
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Category: Uncategorized Tags: banking and investment services, financial crisis, market crisis, operational efficiency
