Yes. Complexity Reduction can be achieved in banking industry through adoption of Financial Technology.
Normally wastes can occur in both hardware and software. For the purpose of this discussion, we shall focus only on software wastes.
Financial sector – mainly banks – is concerned with relationships, strategy and tactics, logistics, information processing, secrecy, intermediation and resource allocation.
We all know banks
– Incorporate (build/buy and operate) trading systems and trading technology to enable buying and selling of financial products at different points of time and in different markets, segments and spaces.
– Perform activities in compliance with internal and external prescriptions and proscriptions – guidelines, procedures, rules and regulations.
One may have come across comparisons of the operations in the financial sector with critical surgery. However my vote will be for comparison with military systems as the financial sector has the potential to damage the entire country / economy (as we have experienced during the recent financial market crises).
Therefore there is zero tolerance for errors – minor or major – in financial sector as in military systems.
Let us look at the extant reality prevalent in the market place in almost all the banks all over the world.
Redundant rules, cumbersome processes and defunct products and services – all legacies of the past and no more current – still remain abundant and dormant within systems in banks across geographies – ‘courtesy’ all types of technology (read as ‘other than financial technology’) – occupying space and a drag on the speedy processes. They only lead to or result in intended or unintended flops, managerial disasters, reputation losses and economic mishaps.
However our banks can get away from these potential life threatening systemic disasters in future by opting for financial technology.
– Is concerned with building systems that model, value and process financial products which are represented by the dimensions of price, time, and credit.
– Integrates mathematical, statistical, computing and economic models with news and analytical systems: and
– Integrates with messaging, transaction, and order processing and payment systems
In addition, Financial technology has the potential to create solutions
– That offer differential customer value propositions and cross selling effectiveness
– Transforming operating models to be more customer focused at a lower cost
– That focus on enriching customer relationship management
– Optimizing and aligning distribution to meet customer needs squarely
Radical customization, constant experimentation and successful business models will be the new hallmarks of competition as our banks will be able to capture and analyze huge volumes of data with the facilitation provided by Financial Technology.
Game changing effects of waste management in banks
Waste management facilitated by Financial Technology will change competition
– By transforming process, altering ecosystems and facilitating innovation
– By attacking redundant rules, cumbersome process and defunct products and services.
– Waste management is the first baby step in big data management leading to complexity reduction.
– Waste Management can facilitate ease of capture of correct data to derive value potential.
– Waste Management can facilitate accurate model development, algorithms, analytics, pricing and financial risk management.
– Waste management will make rules clear, processes simpler and conduct of business easier in banks
No more cumbersome and complex. Complexity Reduction will be achieved totally.
Therefore, waste management should be a core element of strategy in banks as this alone can lead to complexity reduction. And this can be achieved only with the facilitation provided by financial technology.
However, the key to success in implementing financial technology in banks is in the selection of vendor who only specializes in financial technology as s/he alone can implement and deliver the solutions required by the banks.
For sure, our banks will be able to retain their clear focus on brand integrity, quality of service and value for money by going in for financial technology to manage wastes and to reduce complexities.