For all the discussions lately in the commercial, wholesale and corporate banking space about better client onboarding, servicing, improved efficiency and digitization, when I visit large banks I am still amazed with how many silos there are and how much re-keying takes place. I grew up on a small farm and have an appreciation for silos; I also dealt with them in my time in banking and, I know – one thing is true – they look and work great for farming, but not in banking.
In farming, they store valuable grain and silage for feeding the worlds livestock. They look quaint when you see the older wooden ones, particularly those painted red next nice old barn. In banking, they are ridiculous, inefficient and are the embodiment of why upstarts are breaking into banking. The rekeying and busy work that these silos create with their stove-pipe applications is like shoveling manure when I was a kid. You are getting the work done but, it can be dirty (the data errors), manual and it is inefficient when compared to automated solutions!
During my career, I have had many opportunities to see how corporate client onboarding operations can become siloed. Typically, the sales organization is one silo, with its own tool for sales management. It tends to not be integrated into the next silo’s tool for KYC, FATCA and due diligence which is the Compliance and Risk team. Next, there is the account and services implementation team who often have yet another tool for managing those requests. Then, there are the deposit operations and application specific silo teams, each with another non-integrated application.
Each team is usually keen to mention how, within their sphere, they have automated processes, good tools and applications and have created efficiency. When asked about how they get the data from upstream applications, they usually indicate that much of it was rekeyed from another system and the same downstream as well. When I inquire about integration plans, I get a myriad of answers. Their sales application is on the cloud so the security folks do not want that connected to customer data directly or integrated to other secure systems. Apparently the KYC process owners think that integrating to the onboarding system put their chosen vendor and application at risk because they were claiming it should actually replace the onboarding one. Then, I was once told that because the customer experience scores were relatively good, resources had been pulled from the onboarding team, leaving them with a number of changes to improve the process in limbo. So what should banks do?
Since many decisions are driven by compensation package goals, how about aligning those across the various business and technology silos? What if the heads of those groups had a significant shared bonus opportunity available only if they could implement integrated data and process capabilities and reduce the overall rekeying of onboarding information. While Pega technology does solve this issue, the real challenge is in internal alignment around the goal. Why not make it a digitization/digital strategy goal to reduce manual data entry and have one, three, and five-year goals around how much data is actually typed in? I know many in the industry think this is impossible and too large to consider across the silos particularly with all the other regulatory and competitive issues. But a few banks will figure this out (and we are working with a couple of them) and the others will be left behind or become merger fodder. Besides, how else will you get some of these teams to work together and stop shoveling manure?