Bank Product Management: Time To Innovate!

“Why aren’t banks innovating more?” asked an attendee during a presentation at the recent BAI Retail Delivery 2010 conference.

The response from one banker was that the many recent regulatory changes and continued uncertainty added to the high maintenance costs of existing products and systems, combined with frozen or shrinking budgets make it difficult to find time and money for innovation.

There was much nodding of heads from other audience members in agreement. It was clear to everyone that attended the conference that there is a real and urgent need for innovation in retail banking today. Bankers need to continue to rebuild consumer trust lost in the financial crisis and to replace revenue lost due to overdraft legislation.  It is a common dilemma facing many banks and their cross-functional product development teams.

As Celent banking analysts Jacob Jegher and Red Gillen summarize nicely in the Celent Banking blog, attendance definitely seemed to be up from last year at the conference.

The main theme of the conference was “Welcome to the Retailution” and each of the general sessions began with the Beatles singing “you say you want a revolution…”.  The mashup term “Retailution” (Retail + Revolution) was an apt one.  Bankers are increasingly looking to other non-banking retail industries for ideas on how to market effectively and deliver the best customer experience.  Historically, evolution has been more appropriate to retail banking than revolution but current events have conspired to force innovation at even the most conservative bank.  Business as usual is not an option right now.

Some of the key challenges and themes also included:

• How to identify new/replacement sources of revenue (in response to Reg E and other challenges)
• How to leverage the huge and growing volume of data accessible to banks using analytics (structured and unstructured data)
• How to keep pace with and best capitalize on rapid growth in Mobile and Social Media (these topics are often intertwined)

These challenges are very real.  The siloed core banking systems that typically house the product definitions for individual lines of business are very old and brittle in comparison to modern technologies.  Unfortunately, despite all the talk in recent years about replacing these aging systems, very little replacement is actually taking place in North America.  Added to this inflexibility is typically a very large degree of duplication of the product information throughout many of a bank’s back office (core) and front office (channel) systems.  These factors combine to turn even minor product changes into large multi-month or multi-year and sometimes multi-million dollar projects.  With a fixed capacity in any given year for product work, it is not surprising that available resources are fully consumed by regulatory and maintenance activities, leaving no time left for innovation.

Clearly, a key strategic question that arises from the issues presented at the BAI Retail Delivery 2010 conference is:

How can banks free up (make) time and resources to address urgently needed product innovation?

Camilion™ Solutions helps financial services organizations achieve Enterprise Product Agility – the ability to drive relevant compliant products to the right customers ahead of the competition at speed and volume.  With flexible product configuration at the foundation, banks can build a central product repository where complete product definitions are stored. By shifting from coding to configuring products and by inheriting and re-using existing product components such as calculations, forms, rates, etc., banks can launch new or modified products much faster and easier. As well organizations can dramatically lower the on-going effort and cost of regulatory change and product maintenance, thus freeing up an existing product resources that can be refocused on innovation.

To read more, download our white paper Surviving and Thriving with Enterprise Product Agility.

'Bankers are increasingly looking to other non-banking retail industries for ideas on how to market effectively and deliver the best customer experience.'