The McKinsey Quarterly just published Better IT management for banks (subscription required). A nice little summary of some research into the IT operations of banks around the world. The report concludes that, rather than traditional IT concerns such as scale and the cost basis of particular countries that
"Far more important is the way a bank's IT unit forms its technology strategy together with the business. Leading banks also take a more disciplined approach to IT architecture, create standardized platforms, and wring more business value from technology investments."
So how does this point to enterprise decision management or EDM? Well there are a number of best practices outlined in the report that are supported by taking an EDM approach.
- Strong IT governance and a clear alignment to the business strategy
The use of EDM to automate critical decisions allows those decisions, and thus the systems that rely on them, to be strongly aligned with the business strategy and allows the strongly aligned with the business strategy in defining, managing and improving those decisions.
- Fewer systems and a more coherent architecture
The use of a consistent platform for managing decisions across the enterprise - a decision service hub or enterprise policy hub - can eliminate the need for multiple decisioning applications and bring coherence to multiple channels by offering consistent decisions across them.
- Standardized platforms
By standardizing the way decisions are automated, new products and services and the decisions related to them (pricing, eligibility, cross and up-sell etc) can be created and evolved rapidly.
- Innovation and differentiation
One of the most effective ways to differentiate a standard process is by using EDM to inject unique decisions into that process.
- Smart sourcing (check out this book by the same name)
The intelligent use of outsourcing means not only being picky about which processes to outsource but also taking control of the processes you do outsource in an intelligent way.
Finally there was a note to the effect that adopting a new core banking system might not be the answer to a bank's IT problems. Perhaps, then, EDM is.
For more on how banks can use EDM to improve their operations, check out this post about focusing on growth decisions, this one on using EDM to deliver Relationship-Based Pricing and this one on delivering more (and better) self-service. For my "vision" of the future of banking, try this one on using EDM to build the bank of the future, this banking story, and this one on using EDM to respond to Tower Group's trends in financial services.
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