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Senior analyst Jerry Silva discusses CIM hub advantages
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| Banks reach out and touch their customers through
a variety of delivery channels, including branches,
automated teller machines, online banking services,
and call centers. Jerry Silva, a senior analyst at
TowerGroup (a leading research and consulting firm
focused on the global financial services industry), is
an expert on retail banking delivery channels and
customer interaction management (CIM). He shares
his insights in the following interview. |
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| 24x7: What do you see as the key trends in retail banking today?
Jerry Silva: The key trends in retail banking are
all about making the interaction with the customer
more effective, every time it happens. We’ve been
talking for a long time about channel integration as
a way to accomplish this: tying the branch network
to the online bank, tying the call center to the ATM,
and generally bringing all the channels together.
The justification for this integration has evolved
subtly. Originally, the main driver was cost savings
for the bank. If you built a banking functionality
one time—let’s say a balance inquiry, statement, or
money transfer application—and then could use it
across all delivery channels, the opportunity for
cost savings was obvious.
24x7: Have other justifications been proposed?
JS: Yes. As recently as two years ago, people were
talking about integrating delivery channels in real
time so the customer could receive consistent information.
A good example is your account balance,
which may vary depending on which channel you
use to contact the bank; that is, your online banking
application may give you a different balance than
what appears on your ATM receipt, depending on
when the two systems update their records.
This discrepancy not only confuses the customer,
it also increases the workload of the bank’s call
center. When a customer receives two different
balances, the first reaction is to pick up the phone
and call a human being. Suddenly the bank, which
has been trying to get customers to use the ATM at
$0.50 a transaction—or online banking at $0.20 a
transaction—now has to pay $2.50 for a live agent
call center transaction just to clear up the confusion.
Integration means one consistent database
serving all of those delivery channels. |
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24x7: Are there any other reasons to integrate
the delivery channels?
JS: In addition to delivering consistent information
to the customer, banks now realize that real-time
channel integration can facilitate consistent tracking
of sales efforts. For example, consider the situation
of a customer filling out an equity line application
through an online banking service, but abandoning
the application before completing it.
Today, banks would have no idea that the application
process had been started. So when that same
customer walks into the branch the next day, the
application would need to be started all over. The
bank doesn’t realize the customer has already been
online, and doesn’t even know the customer is
interested in a home equity line. But if the delivery
channels were integrated, the bank could see right
away that the customer didn’t complete the application—and take appropriate action.
24x7: Are there different ways to look at
channel integration?
JS: Channel integration can be viewed from two
perspectives. One is business process—how can
you get to the point where you need to write an
application only once, rather than for each individual
channel? The other way that banks look at channel
integration is from the data perspective. How do
we get information? Even if we have different systems
and different applications for each delivery channel,
how can we at least make sure the customer data
and sales data are consistent? Where do we put the
single balance that every customer has? Where do we
keep track of lead management or sales referrals?
To get the full benefit from an integrated channel
perspective, banks need to look at both business
process and data.
24x7: Where do banks stand now in terms
of integrating their delivery channels?
JS: Recently I visited 4 of the top 20 banks in the
United States, and that’s precisely the topic they
wanted to address. Technology is not the issue.
The technology is there, but there are a couple of
things missing. The first is experience: Banks are
very risk-averse, and they want to know from technology
vendors where the solution has been
implemented before; and frankly, not many banks
have done this.
Another key factor is the organization itself. An
integrated delivery channel architecture in any
institution challenges the current state of the organization.
Today, you’ve got managers who are
responsible for the ATM channel, you’ve got the IT
person who’s responsible for keeping the branch
up and running—and now you’re looking at consolidating
all these things into a single technology
architecture. You’re talking about moving from the
existing spaghetti architecture to an integrated,
services-oriented architecture. How does the technology
group interface correctly with the business
to deliver the appropriate solutions under this new
architecture? This is what the banks are asking.
24x7: TowerGroup has proposed a conceptual
customer integration management hub approach
to the problem. Could you explain?
JS: Essentially, the CIM hub takes channels as
they’re architected today and organizes them in a
more logical fashion. It starts with best-of-breed
products at the front office, where there’s still a lot
of specialized technology and functionality. For
everything else that’s common to all the channels,
the business process can be combined into a single
repository. So whenever you make a change to one
business functionality, it is automatically propagated
across all delivery channels.
The third piece of the CIM hub is consistent data.
This can be physically resident in the middle tier, in
the operational data store of the CIM hub, or it can
be pulled together from disparate sources to create a
virtual view of the customer. Now when a customer
shows up in person to conduct a transaction, the
teller has immediate access to all pertinent relationships,
recent interactions, problems, selling
opportunities, and so on. Those three things—the
front office, the business process, and the data—make up the CIM hub.
24x7: What kind of platform is required for
a CIM hub?
JS: This is essentially an OLTP environment, so
transaction integrity is imperative. The customer
relationship management data warehouses that
exist today are strictly batch processing engines;
they run batch analytical processes on massive
amounts of data to come up with lists. That’s not
what we’re talking about here. This is what makes
CIM hub data so different: We’re now talking about
a real-time, online subset of the CRM data warehouse
in that middle-office tier. Of course, there’s critical
“plumbing” around that, including data management,
OLTP considerations, security, and authentication.
24x7: Do banks already have this kind of
platform in operation?
JS: Yes, if they use continuously available systems
to drive mission-critical applications such as
ATM/POS processing. It makes good sense to
leverage this OLTP network as the CIM hub engine.
When we first started seeing solutions in the
market, mostly from branch automation vendors,
they tended to be based on Microsoft® Windows®
software. While the Windows platform has many
benefits, like many other platforms it was not
specifically designed for high-volume, mission-critical
applications. Today if a branch server goes
down, it doesn’t affect your ATM or call center. You do
have a real problem, but it’s not the end of the world.
But how about five years from now, when you
replace your call center and decide to put it on the
same architecture that’s running your branch? Later
you decide to put your online banking on the same
architecture. At that point if the system goes down,
you’ve stopped doing business, because three of your four channels are out of commission. The CIM
hub and operational data store are straight in the
critical path of all customer interactions. Viewed in
this light, the architecture supporting the CIM hub
had better be ultra-available. |
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24x7: Is interoperability also an important
consideration?
JS: Yes, of course. Banks are not going to undertake
massive changes in their IT architectures, so the
ability to adopt a phased approach in technology
implementations—to come at the problem one
piece at a time—is very important.
The banks still need the
longer-term strategic vision to
get it done, but they also need
an architecture that’s flexible as
they migrate from one vision to
the next. From that perspective,
interoperability is an absolute
necessity.
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24x7: What is the most important
recommendation you give
to your retail banking clients?
JS: The part of the organization
that is slowest to change is
the organization itself. When
banks can’t get their hands
around the organizational
aspects, they are hindered from
implementing new technology.
Politics and egos are involved,
and I’m not saying it’s easy. But
for something as important as
channel integration, it behooves
the bank to get over those
organizational issues as quickly
as possible.
Also, some banks seem to
be forgetting just how mission
critical the integrated channel is
going to be. When you put all
your eggs in one basket, you need to make sure that
basket never breaks. So the reliability, scalability,
availability, and manageability of the architecture
are paramount.
When you’re building a customer interaction
engine, you can’t base it on something that was
fine for online banking or teller banking. One of
the only good things about having a completely
disaggregated channel delivery architecture in the
past was that if one channel broke, you could still
run your business. That’s no longer the case with
an integrated channel delivery system.
24x7: How would you summarize
the importance of
integrating delivery channels
in real time?
JS: The benefits have been
talked about for quite some
time. They include cost savings
for the bank, because combining
processes around delivery
channel management makes
the technology maintenance
less expensive. You also have
quicker time to market; to write
a new business function, for
example, you can deploy the
change one time and it’s automatically
propagated across
every delivery channel.
You are providing your
customers a real convenience
by giving them consistent information.
And you are increasing
revenue for the bank by capitalizing
on selling opportunities
at exactly the right moment.
Clearly, the ability to optimize
every customer interaction
through real-time channel integration
is a win for both the
retail bank and the customer.
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JERRY SILVA is a senior analyst
specializing in delivery channels
for TowerGroup’s Retail Banking
practice. His areas of research
include branch and call center
strategies and technologies, as
well as self-service delivery
channels such as ATMs, Internet
banking systems, and interactive
voice response systems. He also
covers technology areas like
Web services, security, and the
migration to TCP/IP in banking.
Mr. Silva has 20 years of banking
industry experience in the development,
support, and management
of delivery channel systems,
products, and networks. He holds
a Bachelor of Science degree in
production and operations management
from Boston University.