Tech Hot Spots Fire Up the Financial Industry

By Bob Violino  |  Posted 2013-01-07

By Bob Violino

Financial services institutions tend to be among the more aggressive users of information technology, which is deployed to improve operations, expand market opportunities and enhance customer service.

Although IT spending for 2012 was slower than first expected for the industry, there are areas of growth, says Rodney Nelsestuen, senior research director at CEB TowerGroup, a financial services research firm in Needham, Mass. Retail banking's IT spending will stay focused on customer intimacy and channel delivery integration for customer experience, he says. Wealth management will become a hot spot for technology spending over the next several years as financial institutions compete for affluent customers and attempt to win deeper relationships and cross sales with them, he adds.

"The hot spot that will impact generally all financial services is in mobile payments," Nelsestuen says. "While this is a newer area, the uptake is rapid, and we see an 18 percent growth in [North America] and Europe." Three key areas govern IT spending in the sector: regulation, customer intimacy/experience/loyalty and cost reduction.

For South Carolina Federal Credit Union (SCFCU) in North Charleston, IT has helped boost efficiency, particularly in improving the balance of its workforce with the demands of its more than 140,000 members.

"Routine transactions are migrating from face-to-face, in-location transactions toward customer-driven self-service transactions that can take place onsite, or through mobile and Internet technologies," says Stephanie Ownby, management information services manager at SCFCU. "As a result, when people contact a financial services organization, it's key to ensure that the most skilled representative is available in order to meet [customers'] needs."

In November 2010, the organization implemented a workforce management system from Verint Systems to increase branch and contact center staffing efficiencies. The main goal of the initiative was to meet service-level targets, while maintaining costs and increasing staffing efficiencies. This means ensuring that the right person is at the right place at the right time in order to meet members' needs, Ownby explains.

The workforce management system uses historical transactional data to project future transactional volumes. The technology has been instrumental in scheduling the variable workforce team, scheduling training and hiring new employees. "We further leveraged the system by integrating it with [the vendor's] phone system and transactional system in order to determine front-line staffing needs," Ownby says.

Among the benefits are a 10 percent increase in workload fit (which measures how accurately staffing requirements are met); a 90 percent reduction in the average speed of answering members' calls to the contact center (down to just 20 seconds); and a nearly 90 percent decrease in the call abandonment rate (to less than 2 percent).

In addition, SCFCU is able to schedule 200-plus sales and service employees within two hours, an 88 percent decrease in processing time. "We can now schedule all front-line employees at one time and have streamlined the scheduling process, where now only one employee schedules all 18 branches in the network," Ownby reports.

The system helps SCFCU deploy "floaters" more effectively. "With visibility to contact center and branch workload and schedules in one place, we can look at everyone's need, deploy resources where they are needed most and achieve much better utilization of the workforce," Ownby says.

BI and CRM Are Top Priorities

For another financial services company, HomeTown Bank in Roanoke, Va., deploying business intelligence and customer relationship management technology to improve processes is a top priority. The bank is deploying BI systems and a CRM product called 360 View from inBusiness Services to help drive customer retention, improve relationships, and increase branch and online banking channel traffic, says Michael Wright, vice president and IT director.

"As we grow our market share, the goal is to leverage existing branch footprints—at least for the next year—to drive profits without increasing significant investment," Wright says. The key driver behind these initiatives "is to maintain our focus as a high-performance, customer-centric community bank [and] increase market share."

Business managers at the bank anticipate significant benefits from the technology initiatives. "We expect this [CRM] software to allow us to uniformly recognize opportunities for future sales and growth, while also providing us with powerful tools to solidify and strengthen our current relationships," says Nadia Summo, project manager for 360 View. "There are many features of this software that we expect to contribute to increased ROI, improved market share and a strong improvement in our already noteworthy customer service levels."

These include customer interaction monitoring, which allows the bank to record each time it touches a customer in any way, whether it's through marketing or service; referral tracking; and profitability data to help the bank make better decisions on rates, terms, etc.

The system also provides the ability to report customer incidents to fellow employees and assign incidents to the appropriate employee or department for resolution. In addition, it enables the bank to group customers for marketing purposes and allows it to track cross-selling activities.

HomeTown Bank is also evaluating the benefits of migrating email and Microsoft Office applications into the cloud within the next 12 to 18 months, Wright says. In addition, the bank is equipping its lending and executive management teams with mobile device management products to provide increased access to CRM data.

Accelerating Server Virtualization

IT is also a key part of the business strategy at financial services company Wells Fargo & Company in San Francisco.

"All the products and services we use to serve customers are based on technology—from the system in the teller line to our online or mobile applications," says Martin Davis, executive vice president and head of Enterprise Technology Services within the Technology and Operations Group. "Literally billions of transactions run on Wells Fargo systems each year and technology is essential for Wells Fargo to perform at its best."

One of the biggest IT efforts at the company has been server virtualization. For every virtual server installed in 2011, 2.8 physical servers were decommissioned, resulting in reduced data center space and power requirements. In 2011, the company virtualized 60 percent of newly deployed servers and standardized 80 percent. In 2012, nearly 100 percent of new servers are virtualized.

Wells Fargo also accelerated server provisioning—from months to 10 days—and consolidated its networks from 17 LAN environments to just two.

Last year, the company completed what Davis called the industry's largest merger, between Wells Fargo and Wachovia. "The amount of complexity involved in combining those organizations was mind-bending, but I think the merger was an inflection point to drive technology to the next level and accelerate many of our pre-existing efficiency initiatives like virtualization and standardization," he says.

By making overall efficiency a focus, Davis says, "we were able to stop planning for a future data center and achieved $1 billion in savings, with a significant portion from infrastructure efforts."

Wells Fargo has developments under way on the mobile device front "that draw on the unique functionality available through those devices," Davis says. This year, the company announced Wells Fargo Mobile Deposit, which allows customers to deposit checks via Apple and Android devices.

"There's no question that mobility has become part of consumers' everyday lifestyle," Davis says. "We need to constantly think about how to offer or evolve our products or services."

There's a lot of opportunity for IT to meet business needs and put more focus on building innovative applications and services, rather than just provisioning and management, Davis says, adding, "We firmly believe everything we do has to be connected to customer value."