Integrated Banking of the Future™ as a Service

If we can have Search as a Service (aka Google) and CRM as a Service (aka salesforce.com), then the day for Business Process Improvement as a Service (BPIS) is not too far. Imagine a retail banking solution in a Software-as-a-Service (SaaS) model available thru an external data center or within one of the commercially available computing clouds. The benefits for small and mid-size banks would be tremendous, as it would not require any additional hardware, software installation, administration or maintenance of the hardware. Banks would simply choose the services they require and once the security concerns are addressed and some minor customization and integration requirements addressed, they would start enjoying the benefits of an IBF-like solution as a service much sooner and with a significantly lower total cost of ownership.

The biggest concern that banks would face with BPIS would be the routing of its banking transactions and data outside its four walls. However, just the way consumers overcame the concerns of presenting their credit cards over the internet in the late 90’s and companies began to rely on salesforce.com for their customer relationship management requirements over the past decade, we believe banks will start to see that the benefits of a BPIS model far outweigh the security concerns that come with a SaaS model. In fact, today’s SaaS solutions provide sophisticated security incorporated at every level, through data encryption, user authentication for application and data access, perimeter defense and other security options, to help safeguard the banks’ interests and information. It has been pointed out on many occasions that SaaS solutions today are more secure than those hosted internally, even though perception is that there is greater comfort in having applications reside within the four walls of the bank. Outsourcing of data centers is a step in the direction of eventually accepting external services to advance the state of retail banking.

BPIS would leverage the powerful concepts of SaaS and Cloud Computing, to bring simplicity, ease of access, lower cost and flexibility to the bank. It would minimize the dependence on the bank's IT systems, and eliminate software and hardware licensing and maintenance costs. It would also enable rapid ROI through much faster time-to-market and pay-as-you-scale models that would be customized for a bank's unique processes and growth strategy. Such a model would minimize the need for up-front capital investment, provide the ability to quickly grow or scale back in response to business needs, as well as an accurate usage-to-cost visibility which is an extremely important metric in determining ROI and judging the success of a strategy.

At the end of the day, the traditional software deployment and SaaS model both have their unique benefits and challenges and it is important that banks evaluate the pros and cons of both options very carefully before deciding on the option that meets the bank’s business requirements, operational procedures, hardware and software procurement policies, data and transactional security guidelines and regulatory compliance requirements.

Regardless of the deployment model chosen, it is important that banks start to take advantage of BPM based solutions in order to maintain their competitive advantage and differentiation. According to Gartner’s Magic Quadrant for BPM Suites report (dated February 18, 2009):

“Since 2000, the financial services industry (retail and investment banks, as well as insurance) has led the aggressive adoption of BPMS technology. Many leading financial service institutions are consolidating their project implementations into a more coordinated BPM program. BPM has mostly been embraced in service industries where human productivity and effectiveness are key to process performance. In the current economic crisis, BPM initiatives seem to be some of the few projects receiving funding.”