Banks are at a turning point!
Banks are at a turning point, with many factors driving them to consider changes in their operating model.
Why is that?
COSTS HAVE BEEN GROWING AT A FASTER RATE THAN REVENUES
Banks have been digitizing their products, services, and processes over the past decade, a shift that was expected to reduce operating costs. Yet, they still see their operating costs rising.
TRENDS ARE UNLIKELY TO CHANGE
The trends of rising costs and constrained revenue growth are set to continue. At the same time, the prospects for increasing revenue are slim.
BANKS MUST TAKE BOLD STEPS
How can banks defy these cost and revenue trends to restore healthy profit margins? Given how difficult it will be to increase revenue in the current environment, the most straightforward opportunities for improving margins lie in cost reduction. And it starts with the back-office and post-trade operations.
Many initiatives were supposed to help, cloud migration and technology restructuring key among them. But for various reasons, they haven’t.
While banks would like to migrate to the cloud much of their post-trade processing, the current offerings for cloud services are not yet perceived as mature enough to fully deliver the requirement.
And on the other hand, banks have also made considerable efforts to improve the cost and efficiency of their existing Operations and Technology functions through critical and large-scale programs focused upon:
technology-architecture simplification and/or
end-to-end automation of business processes and/or
Frequently, even after these efforts, the Technology and Operations operating model is subject to ongoing and costly overhaul in an attempt to stop the ever-rising costs!
So, what is missing?
You should not offshore, migrate to the cloud, or revamp your technology without starting by understanding the costs and bottlenecks of your current processes.
In this current financial scenario, banks will not only have to worry about classic performance measures such as Return on Equity (ROE) and Earnings per Share (EPS); they will also have to focus on operational and reputational impacts indicators, such as delivering services at a reasonable cost and reasonable time.
Simplification and optimization across the post-trade processing offer the highest possibility of better profitability for banks, greater focus on their differentiators, more streamlined workflows, and more straightforward, more transparent processes that will better position the bank for success.
So how to achieve this without a major restructuring?
It can be done thanks to the Operational Collaboration as a Service (OCaaS) offering.
What is OCaaS?
OCaaS is a four-stage process:
Stage I – Discovery
Our intelligent software solution analyses existing data from the banks’ transaction processing systems, applying advanced analytics on the information received. It outputs easy-to-digest reports and dashboards on operational and reputational impacts due to processing inefficiencies.
Operational Impact: to give cost metrics around failure to deliver straight-through processing.
Reputational Impact: to give time-based metrics around the speed of issue resolution.
Stage II – Information Sharing
Findings and recommendations are shared in an open forum with the bank’s senior staff, be they operational, trading or technology, so everyone understands where waste is happening and its causes.
Stage III – Planning and Resolution
All parties work together to develop a strategic roadmap to eliminate or mitigate the inefficiencies that have been found. This roadmap prioritizes and sequences the transformation of an end-to-end process within the business unit, challenging existing workflows, governance, organizational structure, and training.
Stage IV – Trend Monitoring
An iterative process kicks off with regular monitoring of processes, recalibration of the output, and production of trend analytics, with activities focused upon continuous improvements to drive down costs.
OCaaS service is uniquely offered today by KPIMinds.
KPIMinds was set up to work with back-offices to optimize efficiency and reduce operational costs, improving profit margins of ‘revenue-generating’ departments.
We recognize that cutting costs is not a one-off activity nor best delivered through ‘big-bang’ change. It is more an incremental approach focused on activities improving the relative performance of the bank.
The back-office often picks up the mistakes of other departments, and we see part of our role is to help articulate these issues and improve the operational efficiency of the firm.
We are data-driven, using the output from your systems as inputs to our analytics engine and can cater for all major vendor packages as well as those that are developed internally.
And as we see the symptoms and then the causes, we ensure our messages are simple and clear to enable us to work together with you to come up with improvements.
And finally, our sophisticated algorithm places a cost value on effort spent, which can be used to place a financial benefit for investment into the operational infrastructure.
Using our proprietary software, we prepare a detailed report of our findings, which we cover with you, allowing a practical dialogue highlighting real issues relating to actual transactions. Together we agree upon a remedial plan and track its implementation. And over time, through monitoring trends and continually updating our findings and activities, your operational costs will reduce.
KPIMinds will help industrialize the processing workflow in your bank.
There is no need to reinvent the wheel; post-trade operations are now subject to a standard blueprint around a Standard Operating Model (SOM).
KPIMinds will optimize the existing processing workflow by comparing it to the SOM, reducing costly error and dispute management.
Watch the video to learn more about KPIMinds.