Pub. 5 2014 Issue 3

fall 2014 25 West Virginia Banker productivity, and reduced IT costs and IT maintenance. The estimat- ed operating profit improvement is .34 percent to .63 percent of revenue. • Standardized Business Processes. Integrated technology helps with process standardization across functions and divisions. The estimated operating profit improve- ment comes in at .50 percent to .93 percent of revenue. • Achieving Agility. Through an in- tegrated, multi-channel model and real-time customer information, agility–the power to adapt to chang- es in the marketplace and business landscape–is primarily focused on revenue acquisition and retention. The operating profit improvement is estimated at .34 percent to .62 percent of revenue. Integrated technology implies that all applications use a common database, with common business rules, and do so in a re- al-time environment. The ongoing benefits include: • Error reduction due to lack of du- plication of manual data input • Simplified problem resolution by dealing with a single vendor • More consistent data from re- al-time, integrated channels • Reduced cost of electronic channels • Increased customer satisfaction and retention due to ease-of-use, improved account access • Reduced IT costs and maintenance While the impact of interfacing involves: • Errors typically being found by customers, creating increased call levels and satisfaction issues • Increased problem resolution times and decreased quality of problem solving • More time spent on managing vendors • More time/effort/disruption when new versions of multiple vendor products are released • Challenging, complex environment for bank management • Customer confusion due to lack of real-time balances • Dissatisfaction of customers because of inconsistent channel experience • Increased possibility of vendor acquisitions Vendor Management Simplification According to the FDIC Quarterly Report for First Quarter 2013, the average U.S. bank with under $200 million in assets uses 15.5 products from multiple vendors. Imagine the costs saved and efficiencies gained if you could integrate 10 to 12 of your most important products from a single provider. Further, in October 2013, the Office of the Comptroller of the Currency (OCC) issued risk management guidance for third-party relationships, promising compliance citations to financial institu- tions that fail to effectively manage risk in all areas of operations, including those performed by third-party vendors. By working with a reduced number of third parties as a result of channel inte- gration, institutions can greatly simplify vendor management programs. Along with help from a proper vendor assessment and solid vendor management software, banks once performing vendor due dili- gence on 15 providers–including reviewing complex SSAE 16 (SOC 1) and SOC 2 audit reports–can reduce that number significantly. Efficiency Integrating electronic channels also can improve a financial institution’s efficiency ratio. When your customers can use one of many self-service channels around the clock–doing so gladly because they know they’ll get accurate, up-to-date information regardless of the channel–your employees gain more time for such duties as making loans, providing individualized customer service, and analyzing/targeting profitable customer relationships. Using this ap- proach, banks have been known to double their size, relatively quickly, without adding staff. Make Sure You Get More From Your Core As the financial services industry grows in complexity, more banks seek core process- ing partners that can provide all digital channels as well as most ancillary prod- ucts–thereby substantially reducing their number of third-party vendors. Doing so also secures them the streamlined, effi- cient, consumer-friendly experience that increases profits, eases compliance con- cerns and attracts and retains customers. As you weigh your options, start by an- swering these questions: • Does your core processor sell in- terfaces to generate revenue? If so, are they really listening to their core customers? • How much time does it take to manage your vendors? • What is the cost to acquire and manage interfaces? • Are your processes automated or do they require manual input? • How quickly do your systems, business processes and workflows adapt to a changing marketplace and business landscape? And, here’s a good rule of thumb to con- sider: if your core provider has to apolo- gize for your customer-facing channels, it might be time for a change. n Nathan Tatum is vice president of busi- ness development for CSI Meridian, a role inwhich he provides leadership for new initiatives and product innovation. Nathan works closely with financial in- stitutions to align technology projects with strategic objectives, helping them capitalize on growth initiatives.