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IT systems support international retail banking
Highly adaptable thanks to web services
According to a recent study by Capgemini, less than 10% of retail banks worldwide have established global business models. However, one-third is planning to do so over the next five years. This involves more than just the cross-border restructuring of an organisation, however. Information technologies must be implemented and controlled across the board. But this change has turned out to be a lot easier now that open web technologies are being used rather than proprietary software, which were a staple in bank IT landscapes just a few years ago.
Example: Consumer credit
Up until now, most Financial Service Providers have relied on national IT systems for extensive automation of the complete credit process - from application to decision, processing and disbursement to contract management. Ideally, they use a modular web solution that allows the separate processes to be flexibly combined into ready-made web services. These standard components already contain the most extensive business logic possible and can be adapted by parameter settings.
This allows the institutes to save time and money:
For example, a new implementation normally takes less than six months. Anyone with this amount of experience can transfer the success model to other countries and accommodate the country-specific conditions with various sub-processes - for currency, language or legislation, for instance.
Controllers are delighted because each further installation lowers the costs. Previous investments are secure because existing applications can be connected via standard interfaces if required. The trend towards an international credit solution is also favoured by other factors: For one, Financial Service Providers are regaining central control over IT, which partially slipped away from them during the shift to a global orientation. Decisions regarding system use are more frequently made at the headquarters or by a continental operation centre. For another, credit processing is no longer a core competence. It is often placed in the hands of external specialists, who run the solution for all countries from one central location. This means that new functions can immediately be accessed worldwide.
Monitoring credit ratings worldwide
The banks" main focus is still on creating terms and conditions in the credit business. The US sub-prime mortgage crisis has - once again - proven the importance of a reliable credit rating check. The credit quality must be monitored and verified accordingly in all countries without exception. Institutes can combine their credit processing system with country-specific scoring and rating modules which ensure that the international business strategy is implemented.
In practice, decisions on consumer credit applications are no longer made by a local processing agent, but by the central system, by evaluating customer information which has been supplemented with data from local information databases. This process is fully automated and takes less than a minute. It is only carried out manually in problematic cases.
Implementing a uniform IT system necessitates that it be designed for global use in the factory. This is the only way of quickly achieving the desired synergy effects relating to costs, efficiency and performance.
International quality standards
Financial Service Providers may also expect a high level of international experience from their IT service partner, who implements the solution and possibly runs it as well. Of course, experience with large international projects is an important aspect here. Additionally, according to a recent case study report from Berlecon Research, the IT service provider should run its business based on efficient, well-documented processes because of the complexity of the tasks involved. Therefore, more and more IT service providers are introducing internationally accepted best practice models like the IT Infrastructure Library (ITIL). ITIL optimises the workflows, structural organisation and tools used in the operation of IT infrastructures.
Some IT service providers even go a step further and aim for certifications such as the SAS 70. This auditing standard from the American Institute of Certified Public Accountants (AICPA) is used by auditing firms. They check companies" internal control systems and the correct operation of outsourced service processes such as data centre services.
More and more global Financial Service Providers are demanding that their providers conform to ITIL and provide SAS 70 test reports. This means additional expenditure for IT service providers. However, this will pay off because greater process expertise gives them a competitive edge over the domestic competition.
Bridging cultures
The human element is not to be neglected in the global market: All those surveyed by Berlecon repeated, like a mantra, that cultural differences must be bridged. Those who only think of India, Russia and China are forgetting nearby countries such as the DACH (Germany, Austria, Switzerland) region, which is linguistically and culturally diverse.
Whether around the corner or further afield: Generally, IT service providers need to have a local presence, so they train their personnel accordingly. Job candidates are judged by their work experience abroad and employees are trained so that they can work together with bank employees or IT specialists from different cultural backgrounds.
Today, IT service providers must cover a wide range of tasks if they want to successfully place their credit solutions with international Financial Service Providers. The final crucial factor for the project's success is simply: experience and more experience.
(This article appears in the current issue of FLF 2/2008.)
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