Going standard: Benefits of a standardized infrastructure in banking
The banking industry is facing unprecedented change. Industry consolidation has reduced the number of competitors and has forced the survivors to offer customers a greater number of services. All this amid increased government regulations and decreased budgets.
Perhaps the biggest challenge lies in the growing expectations of bank customers. They now expect to move freely among their branch banks and other channels such as ATMs and Internet banking. And they expect this experience to be seamless and consistent.
The trouble is banking technology has not kept pace with customer demands. As Warren Lewis, Microsoft banking industry managing director, puts it, "As customers began to use the new delivery channels, their expectation was that they would get the same service everywhere. But banks built these new channels on a technology house of cards. As customers' expectations grew, banks' capability to meet those expectations diminished."
The need for a standardized infrastructure in banking
Many large banks built their branch teller system, branch platform, call center, and other channel applications separately over many years. These applications often communicate with disparate core application systems and are in effect in silos that don't communicate with each other. This lack of integration affects customers as well as frontline bank employees and operations staff.
For the customer, the lack of integration can mean frustrating delays, inconsistent data across channels, and a less-than-satisfactory experience. And dissatisfied customers vote with their feet. Banks lose more than 10 percent of their customers each year.
For employees, the lack of integrated customer data prevents them from delivering great service, which contributes to low employee morale and increases turnover. Many banks experience 40-percent annual turnover at the branch level and an even higher percentage at call centers.
For the operations staff, managing aging servers running legacy operating systems is becoming increasingly costly and complex. The workforce needed to maintain these systems often depletes the value it creates.
"To transform the customer, employee, and operations experience, banks need to integrate their systems to deliver a seamless, cross-channel experience," Lewis says. "And that requires a standardized technology infrastructure based on industry standards."
Transforming banking without breaking the bank
A standardized infrastructure using industry standards and XML Web services enables banks to integrate their application systems. A standards-based framework can help banks simplify their IT infrastructures and reduce the costs of managing multiple platforms.
Basing this infrastructure on Microsoft technology takes these advantages to the next level. Integration is easy because Microsoft software uses Web services, XML, and Service Oriented Architectures (SOAs). This means Microsoft and partner applications can be tightly integrated to provide a strong, yet flexible multichannel delivery system.
A standardized infrastructure based on Microsoft technology can be employed at most banks, simply and cost-effectively. Microsoft technologies are designed to integrate with existing bank systems and generate new value from them, not replace them.
"In an industry that spends 8 percent of revenue on IT—the highest amount of any industry group—Microsoft's capability to integrate is significant," Lewis says. "That's especially true because banks are under increasing pressure to reduce costs and get more value from their current systems."
Benefits of a Microsoft technology platform
Banks adopting a standardized infrastructure based on Microsoft technologies see a number of other benefits, including:
| • | Increased employee satisfaction Microsoft technology empowers bank employees to better serve customers. With quick and complete access to customer data, they spend less time searching for information and more time cross-selling and retaining customers. |
| • | Lower total cost of ownership Banking solutions built on the Microsoft platform can be deployed faster than those based on competing infrastructures—and Microsoft solutions can cost less to manage over time. Training and other costs are minimized because employees already know how to use Microsoft software. |
| • | Greater return on investment Microsoft software helps banks get more value out of legacy systems. They also can help to reduce IT operations costs by migrating from costly UNIX and mainframe platforms, porting enterprise applications to the Microsoft Windows operating system, and consolidating servers. |
| • | Reduced operations risk Microsoft is continually advancing the security of its technologies. The Microsoft platform is reliable, scalable, and more secure, which helps keep your business systems available 24 × 7. |
| • | More choice Microsoft has the largest group of software partners in the banking industry. This gives banks more choice and enables them to solve any business problem in an intelligent, timely manner. |
Key Microsoft technologies for the banking industry
Here are some of the key Microsoft products for banking solutions:
| • | Microsoft BizTalk Server provides the orchestration and messaging functions to deliver real-time retailing. |
| • | Microsoft .NET Framework is an integrated programming model that enables unparalleled software integration using XML Web services. |
| • | Microsoft Office System includes new programs, servers, and services that build on employees' software skills. |
| • | Microsoft SQL Server offers database support, including analytics, data transformation, and reporting functionality. |
| • | Microsoft Visual Studio .NET development system provides an integrated developer environment for creating the next generation of applications. |
| • | Microsoft Windows Server System 2003 provides an integrated server software provides a solution platform that includes many services, including all user interface and communications protocol functions. |
| • | Microsoft Windows SharePoint Services is a development platform for creating collaboration and information-sharing applications. |
Building a foundation for innovation in banking
A standardized infrastructure based on Microsoft technology can help banks improve the customer, employee, and operations experience while building capacity for continued innovation. The Microsoft technology platform provides a strong foundation to support multiple delivery channels for banks. And because the Microsoft technology platform is designed for easy integration, banks can rapidly implement new solutions as needed to meet their changing business needs.
The goal: Affordable banking solutions with lasting value. Solutions that maximize return on investment, not just today, but 15 year from now. As Lewis explains, "In the old days when banks built a new system, they locked it down for years. Today, the industry needs what we call sustainable transformation. This really means built for change." Lewis continues, "Change has to be an integral part of the design. That's a key element of a standardized infrastructure that uses industry standards and Web services."
