The New Priorities for International Banks
The CIO of a large international retail and corporate bank recently told its vendors:- We want to deliver an efficient, uniform, reliable, and cost-effective service to our customers”. There was a strong emphasis on the words “cost-effective.”
The CIO continued, “... the service must make it easier for our customers to engage with us across the world, without increasing our own risk, and it must meet the regulatory frameworks of all the jurisdictions that we work across. Our management wants us to deliver a higher level of service to our customers and bring down our cost-to-income ratio.”
These words resonate with the priorities of almost every international bank as they search for ways to:
Why Centralization of Operations?
Reduce Cost and Drive Efficiency
Today, a typical international corporate bank spends about 70% of its IT budget on “Run-the-Bank” activities for the maintenance of its legacy systems. As a result, when posed with the challenge to cut costs, most IT Execs tend to look at this large chunk of cost to find ways to reduce costs. However, the trick lies in focusing on using "Change-the-Bank" projects to transform the bank and use the “Change-the-Bank” budget to find ways to reduce “Run-the-Bank” costs. Banks using dispersed core banking systems across the world should trigger the initiation of transformational centralized core banking projects aimed at reducing long term operational costs.
This reduction is often a result of a simplification of procedures and reduced operational overheads.
A standard set of banking products and operational procedures adopted centrally by the deployment of a centralized core banking system allows banks to offer a standard experience to global customers.
Through the Centralization of Operations, Global International banks can address the dual needs of customer intimacy and the implementation of a unified (?) vision. Customer intimacy is nurtured through geographical proximity to customers across different continents. At the same time, a centralized core banking system having a unified set of business rules helps better alignment with the bank’s central vision.
Customer data and transactional data stored in a central core banking system allow banks to meet fast-changing regulatory requirements with ease. For example, a new KYC requirement stipulated by a certain central bank does not require data updates or consolidation across multiple systems located across the world.
Omnichannel offerings can be based on microservices. When coupled with and a modern core banking system, they allow banks to offer their services and products to their customers in almost every conceivable manner. API based integrations give controlled access to the external world. This allows Fintechs and other providers such as PSP's to work jointly with banks to offer innovative solutions and services to the end clients.
Over the last two decades, many leading global corporate banks have worked with Oracle to help them navigate their complex transformational journey.
One corporate bank with a network of 7 branches across Europe wanted to streamline its operations across the continent. Each branch had its own IT setup resulting in a fragmented arrangement, causing inefficiencies. Oracle helped the bank to centralize its IT infrastructure at a single location. It’s IT and operations were centralized in Dublin, and hosting was centralized in London. This helped to reduce cost overheads across different countries.
To learn more, feel free to message me to explore more, or have a conversation.
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