Aging IT infrastructures continuing to hold back bank innovation
2010-07-28
As banks increasingly try to lean on analytical tools to help them learn how to prevent customer attrition, they are being held back by an aging IT infrastructure made up a number of older systems and databases, the Economist reports.

Those older systems can prevent banks from maintaining an organized view of their customers. The paper reports that many times, financial institutions can end up duplicating a customer's information throughout their systems because it is being saved in many different formats and in different places - preventing the bank from offering the best tailored selling opportunities for its customers.

That lack of connectedness can also lead to other problems when trying to resolve customer issues. For example, a customer might call and inquire about a particular service, which can be noted in his or her account information. But if that information never reaches the next representative the customer speaks to, it can negatively impact his or her experience.

The need to upgrade at older banks has given an advantage to smaller startup banks, which can often use their newer systems to be more agile in responding to customer issues and trends.

Banks are beginning to make upgrading their computing infrastructure a major priority. A survey of U.S. financial institutions by the Aite Group found that 20 percent of them had made upgrading their IT systems a priority, and an additional 56 percent said that, given their current systems, an upgrade could be clearly justified.

One major bank, HSBC, has already begun an end-to-end upgrade called "One HSBC" to consolidate and upgrade all of its IT systems over three years. When it started the overhaul in 2008, the company had 55 systems for banking, 41 for online banking and another 24 for credit cards.

The strategy could produce major returns for the company. According to a presentation posted on the HSBC's webpage, a test at a call center found that the new system was much more efficient when responding to customer requests. The average time it took for a representative to block and replace a compromised debit card was cut from six minutes to four - a 33-percent improvement. Other transactions showed time improvements as well.

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