FINANCIAL SERVICESTHE GREATEST REVOLUTION
SINCE MINTED MONEY

8

28

#1

Mark J. Barrenechea
Tom Jenkins

DIGITAL FINANCIAL SERVICESTHE GREATEST REVOLUTION
SINCE MINTED MONEYMark J. Barrenechea
Tom Jenkins

Barrenechea, Mark J.
Jenkins, Tom

Digital Financial Services
The Greatest Revolution Since Minted MoneyFirst Printing, February 2016
Printed in CanadaFirst Edition
ISBN
978-0-9936047-4-4
Published byOpen Text Corporation
275 Frank Tompa Drive
Waterloo, Ontario, Canada
N2L 0A1(519) 888-7111
info@opentext.com
www.opentext.com

Certain statements in this book may contain words considered forward-looking statements or information under applicablesecurities laws. These statements are based on OpenText’s current expectations, estimates, forecasts, and projections
about the operating environment, economies and markets in which the company operates. These statements are subject
to important assumptions, risks, and uncertainties that are difficult to predict, and the actual outcome may be materiallydifferent. OpenText’s assumptions, although considered reasonable by the company on the date of publishing, may prove
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IIIACKNOWLEDGEMENTS

This book is dedicated to the staff, partners,
and customers of OpenText and its subsidiaries.
This book is possible due to their combined efforts,
innovation, and collective vision.

We would like to thank the staff, customers, and partners of
OpenText for their contributions to this book.
Special thanks go to writers Elizabeth Hanson and Renee Tremblay, editor Rebecca Graves,and the following contributors:
David Abraham, Rana Aluraibi, Eric Bencina, Adam Binaut, David Brott, Dave Buchman,
Travis Cain, Michael Ciabattari, Yasmine Conduit, Mark Gamble, Gerard Gibney,
Adam Howatson, Jennifer Kerr, Lindsay Lane, Nichole Lavell, Christine Lesden, Paul Loomis,
Brock MacDonald, Sharon Malloch, Arsalan Minhas, Angela Morrow, Patricia Nagle,
Stefanie Nastou, Paul Olson, Russ O’Neill, Donna Pearson, Paul Roth, Fredric Sandsmark,Scott Schultz, Erin Schwab, Brandy Schwartz, Michael Singer, Michele Stevenson, Albert Tay,
Robert Thiele, Kurtis Thomas, Nicole Wallenburg, and Neil Wilson.
We would also like to thank Kevin Sy and Joe Dwyer for artwork, layout, design, and production.
Special thanks go out to our customers as well for their contributions to this book.
Resources are accredited in the Bibliography.
VCONTENTS
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V
FOREWORD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  IX
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII
1.

DIGITAL DISRUPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

2.

DIGITAL BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27

3.

INFORMATION AND PROCESS FLOWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  49

4.

DIGITAL ENGAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  73

5.

THE FINANCIAL SUPPLY CHAIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  97

6.

DIGITAL GOVERNANCE AND COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .  125

7.

EIM: BUILDING THE DIGITAL ENTERPRISE . . . . . . . . . . . . . . . . . . . . . . . . . . . .  153

8.

STRATEGIES FOR CHANGE MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .  175

BIBLIOGRAPHY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
INNOVATOR STORY AND INTERVIEW BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . 209
INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

VIIINNOVATOR STORIES AND INTERVIEWS
Aon Affinity Insurance Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ASR Nederland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  131Banca Popolare di Sondrio (Suisse) SA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Black Sea Trade & Development Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Boubyan Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  141Citibank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
DNB Finans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
First United Bank and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  173Fluor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  143FWD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Hawksford Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  171Japan Credit Bureau (JCB). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  168KeyBank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  119Mercer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  107Metrópolis Seguros. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  187NASCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Ontario Municipal Employees Retirement System (OMERS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Pacific Blue Cross. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  161PSCU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Symcor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  116Sympany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Temenos. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The PrivateBank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
TIW Group (TIW). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Total Administrative Services Corporation (TASC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Volkswagen Finance China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

VIII

FOREWORD
There’s no denying the fact that the nature of business has changed considerably in thepast two decades. The rise of global markets, regulatory shifts, economic uncertainty,
varying demographics, increasingly tech-savvy consumers, and disruptive technologies
have accelerated the pace of change into the 21st century.
If we examine this pace of change in a larger historical context—one that looks backto our origins and some key accomplishments we’ve made as a species over time—theimplications on business (and society) are radical, onerous, and filled with potential.
Going right back to the beginning, the first human species appeared on the planet from
150,000 to 200,000 years ago (depending on what study you follow). It took us equally
as long to progress to using movable type with the invention of Gutenberg’s printingpress. When we consider how far we’ve progressed since then (with desktop publishingor even the Kindle® and iPads®, for example), this is important on two levels. First of all,it demonstrates a quickening pace of innovation. Secondly, it establishes how central
information has been to our progression.
The invention of the printing press changed the world. It gave us the capacity to share
information on a large scale with a high degree of repeatability. The printing press
was invented in 1440. Within decades, it spread to over 200 cities across Europe andproduced 20 million volumes in print. A century later, this number rose to an estimated
150 to 200 million copies and the value of information increased along with thesevolumes. Since it took roughly 150,000 years to get to that inflection point, we can say
this came about at a very slow rate of progress.

Human History Timeline: 500 Years• Printing Press
Pop: 375 million

1400• Renaissance• Movable Type• Europe/Americas
linkedPop: 500 million

1500• Scientiﬁc Revolution• Microscope• Telescope• Suspension Bridge• World Map• Adding Machine• 2 yr. circumnavigation • Nation State
Pop: 600 million
Pop: 700 million

1600• Steam Engine• Electric Motor• Photography• Industrial Revolution• Refrigerator• Telegraph• Telephone• 2 mo. circumnav
Pop: 1 billion

1700

1800

• Autos• Submarines• Phonograph• Vacuum Tube
• Electric Typewriter• Robotics• Laser• 2 week circumnav
Pop: 2.5 billion

1900
• Jet
• Satellite• Solar Cells• Xerox• Car Phones• Space Travel• TV• Microwave• Fax• 2 day circumnav

Human History Timeline

IX• Computers• Optical Fibre• Internet• Social Networks• Speech Recognition• Sensors• Artiﬁcial Intelligence• Quantum Computing• Wearable Technology
Pop: 7 billion

Present Day• Beacons• Biometrics• Nanobots• 3D Printing• Analytics• Smart Cars
• Smartphones• Tablets• Internet of Things• 1 day circumnav

The printing press prefaced another significant era of human invention. A couple ofhundred years following its invention, we embarked on the Industrial Revolution with
the invention of the steam engine. We automated our textile factories and the pace ofinnovation increased. Following the Industrial Revolution, it took us approximately 120
to 140 years to get to where we are today. When we consider the great wealth of material
goods we now have and our capacity to manufacture them through automation, we cansee that the pace of change has been truncated from 150,000 to 120-140 years. This
becomes even more extraordinary when we add the Internet to our timeline.
The Internet revolution took only about 20 years to propagate. After that time it became
ubiquitous—connecting people across devices, businesses, applications, and hardware likesensors and robotics. Some research analysts estimate that by 2020, 80 percent of theadult human population will be connected to the Internet. During this time, the number ofmobile phones will surpass the human population. This is phenomenal when we consider
that just eight years ago, iPads did not even exist.
So far, the pace of change has accelerated from 150,000 to 140 to 20 to 8 years. The rate
at which this change is occurring is exponential, and this is the speed of digital. The digital
revolution will usher in another mass inflection and exponential change in the rate of ourdevelopment to create a digital world. The pace of innovation will be unprecedented andtechnological advances will be unfathomable in present terms.
When we compare the volumes of information the printing press made available to thevolumes of information we generate today, the difference highlights the speed of digital.
Every 48 hours, we produce the same amount of information that was created fromthe invention of the printing press up until about 2003. This means that the majority of
the world’s information has been generated in the last two years. The velocity at which
every business is generating data is greater than ever, and this challenge will only becompounded. In the U.S. alone, organizations in 15 out of the 17 major industries house
stores of information equivalent to the U.S. Library of Congress. The world’s largest
organizations are struggling to store and manage their terabytes of information.
Financial services is no exception. In a digital world, the firms that succeed will be theones who capitalize on the value of their information and use it to their advantage totransform their operations. Financial services is an information business. Transactions
are exchanged between parties and more often than not, it is capital that’s exchanged
rather than physical goods. As well as managing vast stores of information, the industry as
a whole is struggling with technological disruption, mergers and acquisitions complexity,
global regulations, and legacy infrastructures. These factors will not help when the timecomes to pivot in new directions and embrace new digital business models.
Information lies at the heart of innovation and disruption. No longer considered just thecost of doing business, information is instrumental in driving innovation and growth.

XWhen used the right way, information leads to greater customer satisfaction, accelerates
time-to-market, helps open new opportunities, and enables businesses to remaincompetitive. Information is a key strategic component for every organization in financial
services today.
From 150,000 years, 140 years, 20 years, 8 years—this is the speed of digital, and it’s
not coming—digital disruption is already here. How is it impacting firms in the financial
services industry and how they do business with their partners and counterparties? Or
how they build relationships with customers and engage their workforce? And why is atransformational information strategy critical for success?
This book has been written to describe the digital revolution that is taking place in thefinancial services industry and provide strategies for implementing transformationalchange. It outlines the ways in which current operations are being disrupted and provides
strategic approaches firms can take to capitalize on opportunities to create value.
Enterprise Information Management (EIM) is a key technology that enables Financial
Institutions (FIs) to simplify their volumes of information, digitalize their operations, andaccelerate their business, creating better ways to work in the digital world.
EIM empowers FIs to extract value from their information and make it accessible—insecure and compliant ways. In an economy where intellectual property is a tradecommodity, new business models will have to be created. In order to address disruptivechanges coming their way—new technologies, a changing workforce, digital consumers,
and regulatory pressures—FIs will have to transform their operations. In short, they will
have to rethink, rebuild, redesign, and re-platform themselves. They will have to disrupt
or die.

Adam Howatson
C H I EF M A R K E T I N G O F FI C ER ,OPEN TEXT CORP O R AT I O N

XIINTRODUCTION“It’s not just business models that are changing, it’s value chains and product offerings
as well. Digitalization is not just changing industries, it is increasingly blurring the lines
between them.”1“It is not the strongest or the most intelligent who will survive but those who can best managechange.” – Charles Darwin

Business in the Digital World
We live in a time of unprecedented change. The digital world is fast approaching—in
fact, in many industries, it’s already here. In every sector, digital technologies arechanging the rules of business by enabling new business models. All of the great
innovators of today, from Google and Amazon to Apple, Netflix, YouTube, Airbnb,
GoPro, and Uber, have successfully fused imagination with technology to introduce
new business models and change the way consumers buy, the way companies market,
and the way enterprises operationalize their businesses.

Buy Now

SoftwareOne-time Transactions

One-time Metrics

Subscription

Services

Life-time Value

Recurring Metrics

Business Models Are Advancing

1“ Executives Expect Digital Disruption to Displace 4 in 10 Incumbents by Industry within Next Five Years,” Webwire, June 24,
2015, http://www.webwire.com/ViewPressRel.asp?aId=198501 (accessed July 2015).

XII

All around us, digitalization is promising greater opportunity. Disruptive technologies are
fueling a subscription economy. As business moves decidedly to the Cloud and consumers
access more products and services using their mobile phones, on-demand services aredeposing the mainframe in enterprise infrastructure. Digital innovators are focusing
on creating exceptional experiences for their digital consumers and benefiting from alifetime of customer value. Brand experiences are built on networks, and companies
are measuring their value based on recurring metrics. In the digital world, organizations
will have to embrace digitalization or they face the risk of losing market share or evenbecoming obsolete.

Disrupt or Die

Digital Intensity

Over the next five years, executives expect digital disruption to displace four out of
ten incumbents—or 40 percent of established market leaders. 2 This is a profoundforecast, and it applies to all industries. Digital disruption is toppling market leaders
and restructuring industries faster than ever before in history. If market leaders are
threatened, then no organization is untouchable.

-11%

+26%

-24%

+9%

Transformation Management Intensity
Digital Leaders Are 26 Percent More Profitable than Competitors 3

2“ Executives Expect Digital Disruption to Displace 4 in 10 Incumbents by Industry within Next Five Years,” Webwire, June 24,
2015, http://www.webwire.com/ViewPressRel.asp?aId=198501 (accessed July 2015).

3“ The Digital Advantage: How digital leaders outperform their peers in every industry,” Capgemini Consulting and the MIT
Center for Digital Business, 2012.

XIII

In the digital world, the winners will be the ones who find new customers, discover newmarkets, and pursue new revenue streams using digital channels. These will be the digitalleaders, and they will have competitive advantage. Companies that demonstrate digital
growth have higher financial performance than their less digitally mature competitors.
On average, digital leaders are 26 percent more profitable than their competitors. They
generate 9 percent more revenue, and they create more value, generating 12 percent
higher market valuation rates. For large traditional companies, this equates to billionsof dollars.4

Fintech Rising“A new digital ecosystem is being built; one in which launching new products and services ismuch easier, cheaper, and faster than it was a few years ago. Startups, developers, designers,
large digital companies—all interact in this ecosystem, simultaneously competing andcollaborating.”5
In the digital world, the winners will outpace the losers who fail to reinvent themselves
and miss the opportunities fueled by disruptive digital technologies. The financial services
industry is no exception: while 93 percent of executives believe their business will be
disrupted within the next 12 months6, 86 percent of insurance executives and 83 percent
of banking and financial services leaders believe that their business will be disrupted bydigital technology.7
Startups are disrupting the financial services industry. Five years after the global financial
crisis, Financial Institutions (FIs) are struggling to achieve profits and organic growth.
Trust has been eroded by recent scandals in the industry, a recession, and the rise offinancial technology or “fintech” companies—those who are willing to embrace disruptive
technologies to meet the demands of the digital consumer and provide more engaging
experiences. These are approaches that incumbents are overlooking to their own demise.
Using algorithm-based innovation, fintech organizations are helping people save money,
balance their budgets, plan financially for the future, invest wisely, and process payments
digitally, in real time. They’re applying technologies like the Cloud, mobile, social, andanalytics to deliver more targeted products and services to consumers with much greater
ease and accessibility—and in the process, they’re reshaping the entire industry.

4

Nigel Fenwick and Martin Gill, “The Future of Business is Digital,” Forrester Research, March 10, 2014.

5“ Chairman of BBVA analyzes effects of technological revolution on banking industry at Harvard University,” BBVA Press Room,
April 22, 2015.

6

Nigel Fenwick and Martin Gill, “The Future of Business is Digital,” Forrester Research, March 10, 2014.

7

Oliwia Berdak and Bill Doyle, “Digital Disruption Hits Retail Financial Services,” Forrester Research, July 16, 2014.

XIV

Massively
Disrupted

Moderately
Disrupted

Somewhat
Disrupted

Total

Insurance

86%

Education and Social Services

83%

Banking and Financial Services

83%

Government and Nonprofit

82%

Media, Entertainment, and Leisure81%

Retail and Wholesale

81%

Telecommunications

78%

Professional and Business Services

77%

Ultilities

77%

Healthcare

76%

Transportation and Travel

74%

Consumer Packaged Goods

72%

Technology Products

70%

Pharmaceuticals andMedical Equipment
Oil, Gas, Mining, and Chemicals

70%
65%

Construction and Engineering

63%

Industrial Products
0%

60%
25%

50%

75%

Executives in Financial Services Expect Digital Disruption 8

Fintech innovation is on the rise. In a recent report, global investments in fintech are
expected to rise to $8 billion U.S. by 2018 due to lower barriers of entry made possibleby open-source software and cloud computing. Currently, there are at least 4,000 active
fintech startups, and a dozen of them are valued at over $1 billion. Entrants to the market
are challenging traditional players to offer similar capabilities and quality of service orlose market share.9
Driven by their desire to better serve consumers, fintech is moving the industry forward.
Digital consumers can borrow money to crowdfund their enterprises using Peer-toPeer (P2P) platforms like Kickstarter®. They can transfer money using PayPal® orTransferWise® and payments can be processed instantly using Apple Pay® or a digitalwallet mobile app. There are even “robo-advisors”—digital financial advisors who advise
consumers where to invest their money and how to spend wisely. This is the digitalworld, fueled by a holistic, digital ecosystem in which FIs will play the supporting role in a“whole-life platform”. This platform will be made up of integrated technologies, data, andservices—all driven by the digital consumer.
8

Nigel Fenwick and Martin Gill, “The Future of Business is Digital,” Forrester Research, March 10, 2014.

9J oseph Young, “6 Rising FinTech Startups,” The Cointelegraph, May 22, 2015, http://cointelegraph.com/news/114330/6rising-fintech-startups (accessed July 2015).

XV

Dollars ($B)

8
7

$6-8B

6
5
4

~$3B

3
2
1
0
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Global Fintech Will More than Double by 2018 10

While the concept of robo-advisors might seem futuristic, digital transformation isalready well underway. What this means is that many of the current business models thatbelong to retail banks, corporate banks, insurance companies, capital market firms, card
issuers, and corporate treasuries will not be sustainable into the future. While the role offinance remains focused on growing corporate revenue and customer acquisition, survival
will require the adoption of disruptive technologies to drive continuous innovation cycles
and customer engagement. Digital Financial Services, The Greatest Revolution Since Minted
Money has been written to explore these facets.
In the digital world, FIs will be required to deliver a range of products and services using
digital channels. The alternative is to be marginalized to utility providers as holders ofcapital and suppliers of accounts.11 In short, they will need to disrupt or die. They will needto digitalize all of their processes and operate at the speed of digital. To outrun the riskof becoming irrelevant, FIs will be required to become a crucial part of their customers’
digital ecosystems. To overcome key disruptive forces, they will need to invest in newtechnology platforms, integrate emerging technologies with legacy IT infrastructure,
standardize their data across systems, and create dynamic and flexible processes tosupport new technologies and devices.

Key Disruptive Forces
Many FIs cannot keep pace with the rising demands of the digital consumer. Even
established brands are having a hard time capturing the mindshare of the emerging
consumers: the digital natives also known as Millennials. For the first time in years, there

10J oseph Young, “6 Rising FinTech Startups,” The Cointelegraph, May 22, 2015, http://cointelegraph.com/news/114330/6rising-fintech-startups (accessed July 2015).

11

Oliwia Berdak and Bill Doyle, “Digital Disruption Hits Retail Financial Services,” Forrester Research, July 16, 2014.

XVI

has been a decline in positive banking experiences.12 FIs are not satisfying Millennials:
53 percent believe that their banks fail to differentiate their services, 33 percent believe
they don’t need a bank, and 73 percent would feel more inclined to support new financial
services offerings from Google, Amazon, or PayPal rather than their own banks.13 Branchlocations are slowly being replaced by an online presence with mobile and social access.
Future generations will interact with banks as part of a digital experience, instead of the
traditional channel experience of today. Increasingly, the bank of the future is shaping up
to be an integrated network of distribution channels designed to meet the diverse andchanging needs of the consumer.
In the digital world there will be longer, more interactive transactions and higher volume
networking. There is already an incredible amount of online transactions taking place
on a daily basis. New technologies like social and mobile and how they connect over 5G
networks will change the way people consume financial products and services. These
high-powered networks will offer organizations zero-distance connectivity to a highquality, global network of five billion users. Enterprise IT infrastructure will move to the
Cloud. Mobile users will replace PC users, and more services will be mobile-enabled. The
Internet of Things (IoT) will automatically integrate machines, data, and people. Real-time
payments, transactions, and processes will become the norm.
As employees, Millennials will impact the enterprise as radically as they are impacting
markets as consumers. Digital enterprises of the future will have to support a culture ofinnovation and build technologies to support a changing workforce. By the year 2020, 50
percent of our workforce will be made up of digital natives—generations that have grown
up with the Internet and expect to use the same tools at work that they use at home. FIs
will have to cater to their needs—from mobile apps to collaborative social networks.
Finally, the Financial Industry will have to re-platform compliance. Growing regulatory
and market pressures will call for more robust governance strategies for enterprise
information. These requirements will be driven by emerging global regulations,increasing amounts of Internet users and privacy-related issues, big data, and protection
against cybercrime.
A digital world with new technologies, a changing workforce, a global marketplace,and digital consumers offers pure opportunity for FIs. Now is the time to capture theopportunity and meet the challenges of the digital world. The pace of change underlies
the urgency with which the FI must transform.

12“ World Retail Banking Report 2014,” Capgemini, 2014, http://www.capgemini.com/thought-leadership/world-retail-bankingreport-2014 (accessed March 2015).

13

A nna Cotton, “Can financial services marketing meet the social media challenge?” The Drum, February 2015, http://www.
thedrum.com/opinion/2015/02/05/can-financial-services-marketing-meet-social-media-challenge (accessed March 2015).

XVII

Digital Transformation
Startups and web-based companies are using digital business models to disintermediate
the established market leaders. To remain relevant in the digital world and gain asustainable competitive advantage, FIs will be required to transform themselves into
digital enterprises. Digital transformation requires a radical overhaul of enterprisestrategies, processes, products, services, and relationships. Enterprise Information
Management (EIM) empowers organizations to make this journey.
As a transformational platform, EIM helps FIs reduce costs by integrating emerging
technologies with legacy infrastructures. It enables them to simplify and integrate
information across systems and digitalize processes to increase efficiencies. Consolidated
information and process management empowers FIs to meet the requirements of digital
customers in a new disruptive world. Based on accelerated innovation cycles, FIs canincrease the speed of information delivery through integrated systems—on-premises, in
the Cloud, and throughout the entire business network.
Information lies at the core of digital transformation. In the digital world, informationis the new currency, playing a fundamental role in empowering FIs through innovation,
growth, and opportunity. Digital leaders will differentiate their products and services
based on a strategy that maximizes the potential of information as a key differentiator.
EIM is the key transformational technology. It provides a proven foundation for the digitalenterprise to advance engagement with employees, customers, and partners, as well as
across the entire financial supply chain. This book has been written to help FIs chart theircourse on their journey to a digital future. It is a discourse on digital transformation, as
told by our customers, analysts, innovators, and industry thought leaders.

1

Data and Information

Manage information flows anddrive engaging experiences by
revolutionizing the way
information is created,consumed, and stored

2

Information
Exchange

Facilitate efficient,secure, and compliant
exchange of information
inside and acrossorganizations

3

Business Process
Workflows

Enable businesses torapidly understand andautomate complex
business processes

EIM Enables Digital Transformation

XVIII

4

Analytics

Utilize enterprisedata and big data to
generate insights

With change comes tremendous opportunity: the opportunity to form deeper
connections with customers, partners, and employees; to create social, mobile, andflexible workplaces that are conducive to higher levels of productivity and innovation;and to deliver products and services according to individual need and specification. With
opportunity comes risk, and the greatest risk lies in not embracing disruption in thedigital world.

Mark J. Barrenechea

Tom Jenkins

CEO & CTO,CHAIRMAN,

OPENTEXT CORP O R AT I O N

OP EN TEX T CO R P O R ATIO N

XIXC H A P T E R

DIGITAL DISRUPTION

1CHAPTER 1

C HAPTER 1

Digital Disruption“Many conventional banks are going to fall by the wayside. Those that make it will no longer
be ‘banks’, but software companies, competing with the digital players and with a completely
different value proposition.” – Francisco González, Chairman and CEO of BBVA1
Never before has the financial industry been threatened by so many disruptive forces.
Against a backdrop of the recent global financial crisis, fluctuating interest rates, andvolatile market cycles, Internet-based startups are disintermediating the market anddisplacing traditional incumbents.
A combination of market forces and technology are lowering the barriers to entry, making
the timing just right for disruptors to capture market share from established banks andinsurance companies. Technology-driven organizations are reshaping the industry,offering simplified algorithm-based financial services. Based on advances in connectivity,
software, and devices, these new agile players are creating a complex landscape of lending,payments, personal money management, investment, and advisory services. Convergenceis introducing competitors from other industries like retail and technology, who arewell positioned to connect directly with digital consumers and offer more personalized
financial services.
Competition is fierce. An explosion of regulations is making it harder for establishedFinancial Institutions (FIs) to innovate and grow. Shackled by complex legacy IT
infrastructures and outdated strategies, FIs are unable to respond sufficiently to risingcompetitive threats. Scale alone will not ensure survival. To succeed in the digital world,FIs will need to re-invent themselves as digital enterprises. First market movers will invent
digitally based business models and lead the disruption.
As an introduction to digital disruption, this chapter examines how technologies like mobile
devices, social media, analytics, and the Internet of Things (IoT) are reshaping the financial
services sector.

Disruptive Innovation
Even the most mature industries are being transformed by disruptive innovation.
Disruptive innovation is one of the most important theories to surface over the last
20 years. In his article for the Harvard Business Review (January – February 1995)“Disruptive Technologies: Catching the Wave,” Clayton Christensen defines the term1

“ Chairman of BBVA analyzes effects of technological revolution on banking industry at Harvard University,” BBVA Press Room,
April 22, 2015.

2

DIGITAL DISRUPTION“disruptive technology” (commonly referred to as “disruptive innovation”) as “aninnovation that helps create a new market and value network, and eventually goes on to
disrupt an existing market and value network (over a few years or decades), displacing an
earlier technology.”

Performance

Disruptive innovation creates new markets or reshapes existing ones. As market leaders
continue to produce “sustaining technologies” that are reliable and profitable, theycreate opportunities for disruptive innovators to enter the market. An innovation that is
disruptive allows a niche set of customers to access a product or service that was once
only accessible to consumers with a lot of money.
Incumbents nearly always win
ns

vatio
g Innoalhnicof TecPace ss
e
r
g
o
r
P

inin
Susta

Disruptive
Innovations

Entrants nearly always win

Time

FIGURE 1.1: The Disruptive Innovation Model 2

According to Christensen, disruptive technologies may offer poorer performance thanleading technologies but are more affordable and deliver benefits not currently available
from existing technologies. Market leaders miss these innovations and how they will impact
the market. Typically, disruptive technologies improve in quality over time and replace older
technologies. In some cases, innovations enter the market and replace leading technologies
immediately based on superior performance. Both scenarios are currently uprooting themarket leaders in the financial services industry at a global level.

An Emerging Digital Ecosystem“In his latest annual letter to shareholders, Jamie Dimon, the boss of JPMorgan Chase,warned that ‘Silicon Valley is coming.’” – The Economist3
Today’s financial services industry is a crowded space, rife with disruptive innovation. DigitalFIs, often contextualized as “financial technology” or “fintech” organizations, are emerging tooffer a range of services that circumvent traditional payment, lending, and insurance
2Peter Duke, “Sitting on Top of the World – A Strategy for Life (and Business),” Peter Duke Media Services, March 10, 2010,
http://dukemedia.com/sitting-on-top-of-the-world/ (accessed Sept 2014).

3“ The Fintech Revolution,” The Economist, May 9, 2015, http://www.economist.com/news/leaders/21650546-wave-startupschanging-financefor-better-fintech-revolution (accessed May 2015).

3

CHAPTER 1

infrastructures. Fintech companies are generally startups that use disruptive technologies
to deliver tailored products and services with efficiency and ease. Unlike incumbents in theindustry, the focus is on delivering services rather than providing a full-service online bank.
Fintechs are focused explicitly on meeting consumer needs, and without the overhead of afull-service FI, they can often deliver much cheaper products and services.
Like other disrupters from Silicon Valley, fintech innovation is on the rise. Entrants arechallenging traditional players to offer similar capabilities or risk losing market share. PayPal,
an online Peer-to-Peer (P2P) real-time payment platform, is a great example of a disruptive
innovation. PayPal combines technology with new business models to supplant current
payment systems in place. They provide a cheap, convenient, and flexible alternative toestablished banks by giving both consumers and merchants more ways to connect to theirmoney and to each other.4
Founded in 1998, PayPal continues to be at the forefront of the digital payments revolution,
enticing customers away from traditional banks and chipping away at their transaction
revenues. The Company has built up a global presence, serving 203 markets and allowing
over 110 million active users to get paid in more than 100 currencies. PayPal is an ambitious
player. It has progressed from a payment processor to a one-stop payment shop and hasformed partnerships with Starbucks, Home Depot, and other global retailers. PayPal is ahighly disruptive threat as consumers want more flexible services at faster and affordable
rates and merchants are frustrated with current payment systems.

FIGURE 1.2: Bitcoin

4Paypal.com.

4

DIGITAL DISRUPTION

Like PayPal, Bitcoin® is another innovative payment network that is disrupting the current
payment system. Bitcoin works without a central repository or single administrator, which
has led the U.S. Treasury to categorize it as a decentralized virtual currency. It is the largest of
its kind in terms of total market value ($3 billion at the time of writing). Bitcoin is open sourceand belongs to everyone. Transactions are verified by the network and recorded in a publicly
distributed ledger called the block chain. The ledger uses its own unit of account, also calleda bitcoin. Since the system is P2P and operates with no central authority or banks, users
can transact directly without needing an intermediary. The network collectively manages
transactions and issues bitcoins.
Bitcoin is not subject to regulations because it holds no capital. Their innovative approach
to payments and exchange remains unfettered. For this reason, Bitcoin has attracted theattention of governments around the world. The market is growing at an accelerated rate.
Over the past year, global private investments in Bitcoin-related companies were set to reach$300 million, a three-fold increase from the year before.5
There are many other examples of industry startups that are displacing services
provided by established brands and eroding consumer loyalty. Some solutions aredesigned to cut out acquirers and credit cards, such as Dwolla and GoCardless. Social
lending systems, like Zopa, Lending Club, and Kickstarter help entrepreneurs tap into a
network of digital investors and lenders to crowdfund their business innovations. Digitalmoney managers like Mint.com, Money Dashboard, HelloWallet, and OnTrees offer
budget advice based on spending and transactional data to help manage consumer debt
and savings. Disrupters like MarketRiders and SigFig assess consumer banking accounts
and assets to make recommendations about future investments. Social insurance is also
a budding industry, empowering users to pool insurance risks and self-insure. 6

FIGURE 1.3: OnTrees Mobile App5

N eils Christensen, “Regulations Are The Next Step For Bitcoin - Montreal Economic Institute,” Forbes, May 30, 2014, http://
www.forbes.com/sites/kitconews/2014/05/30/regulations-are-the-next-step-for-bitcoin-montreal-economic-institute/(accessed March 2015).

6

Oliwia Berdak and Bill Doyle, “Digital Disruption Hits Retail Financial Services,” Forrester Research, July 16, 2014.

5

CHAPTER 1

As the ecosystem evolves, market leaders in other sectors are jumping into the game,
offering credit cards and banking services. Supermarket chain Loblaw Companies
provides banking services with PC Financial. Most customer interactions are completed
on the Internet, the telephone, or at kiosks in the supermarket. Retailers Home Depot,
General Electric (GE), Canadian Tire, and Walmart have expanded their services
to include credit card services, payments, and transfers. These organizations canleverage their massive databases of consumer payment information, relationships, andestablished channels for competitive advantage.
Despite radical changes to the financial services landscape, it’s not all doom andgloom for the incumbents. Many of the fintech startups just mentioned are focusedon customer engagement at the front-end, which means that they are built on existing
back-end infrastructures belonging to banks or credit card companies, for example.
What will be required for incumbents to keep pace is modernization of their systems,
standardization of data, and the digitalization of processes—Chapter 5 explores thisin detail. Partnerships with fintech startups also provide compelling alternatives andopportunities for incumbents.
One advantage that established FIs hold over smaller startups are the volumes ofcustomer information they have access to. For many of these larger organizations, thechallenge is to manage this information effectively for competitive advantage (which is
explained in Chapter 3) while complying with myriad regulations (covered in Chapter 4).
How established FIs use their data will determine how they fare against the fintechs inthe digital world. But what does this world look like? The following section examines theimpact of digital technologies on the financial services industry and their potential for
innovation and opportunity.

The Impact of Digital Technologies
As delivery channels to consumers converge, advances in technology and connectivity
are at the root of the upheaval and opportunity in the financial services industry. The
Internet and its associated software and infrastructure have empowered small players
to innovate and scale using less costly platforms. Comparison engines and apps are
giving consumers faster and cheaper access to investments, capital, and currency.
When financial and consumer data exchange is automated across the IoT and wearable
technologies and analytics applied to this information to enrich it with value, thepotential for new services will be unlimited.

6

DIGITAL DISRUPTION

Together, disruptive technologies present tremendous opportunities to increase
consumer engagement, break down information silos, and deliver highly targeted
solutions at a lower cost. Technologies that include mobile computing, social networks,
cloud computing, fifth-generation (5G) wireless, and the IoT are disrupting the entire
financial services industry. When combined, these breakthrough technologies helporganizations bypass the costs typically associated with barriers to entry and connect
directly with consumers. This is happening at an accelerated rate because thesetechnologies are affordable, accessible, and portable.

Digital Disruption is Stronger and Faster10x

the innovators

1/10ththe cost

100x
the power

FIGURE 1.4: Digital Disruption Is Stronger and Faster7

The swift pace of innovation gives digital disruptions even greater impact. For
digital technology, this is based on the speed of development and the magnitude ofinnovation involved in its creation. Unlike the disruptions introduced by the web in thenineties, today’s digital disruption is cheaper, faster, stronger, and more reliant on the
combination of key technologies and environmental factors. These include the ubiquityof mobile phones, increased speed and bandwidth, more affordable data storage, andfaster computing power and data processing ability. With more people connected
and sharing ideas in a global, digitalized marketplace, the pace of innovation can only
increase exponentially.

Advances in Connectivity and the Cloud
By the year 2020, the number of Internet users is expected to jump to 5 billion. 8
This growth in Internet users will result in more people gathering, transmitting,and exchanging information online. The Internet will evolve as technology disrupts
every industry, revamping value chains and enabling cross-industry partnerships andnetworks. The transformation from analog to digital is already well underway.

7

James McQuivey, “Digital Disruption: Unleashing the Next Wave of Innovation,” Forrester Research, Inc., 2013.

8“ Internet use reaches 5 billion worldwide,”Future Timeline.net, http://www.futuretimeline.net/21stcentury/2020.
htm#internet-2020 (accessed March 2014).

7

CHAPTER 1

In the near future, 5G wireless networks will support 1,000-fold gains in capacity,
connections for at least 100 billion devices, and a 10 gigabyte individual user
experience capable of extremely low latency and response times. Deployment of these
networks will emerge between 2020 and 2030. Breakthroughs in wireless network
innovation will drive economic and societal growth in entirely new ways. Fifth-generation
wireless will power networks capable of providing zero-distance connectivity between
people and connected machines.9 Based on this connectivity, the number of cloud-based
business models and applications will continue to rise.
Global Population and Internet Users, 2000-2020
6.9B
1.6

B
2000

7.5B
5B

B

6.1B
0.3

2010

Global Population

2020

Internet Users

FIGURE 1.5: Increasing Internet Usage

In today’s subscription-based economy, business is moving decidedly to the Cloud.
Fueled by cloud technologies, new business models will continue to emerge and evolve.
By 2017, 50 percent of large enterprises will adopt a hybrid cloud-computing modelwith data stored partially on cloud servers and partially onsite.10 FIs will also takeadvantage of the on-demand capacity and cost effectiveness of cloud computing bytransforming core applications for banking, insurance, and payment processing. From
shared services to cloud-based front-office and back-office applications, processes suchas claims management, business intelligence, and credit scoring will become available
on a Software-as-a-Service (SaaS) basis.
FIs will implement hybrid cloud deployments to balance their workload and meet all theirdata sovereignty requirements. The Cloud will continue to offer benefits like seamlessprocess integration across business networks, collaboration, easy information exchange,
secure connectivity for transacting, improved visibility and transparency of transactions,and the standard lower cost of ownership that comes with cloud deployments. FIs like
The Insurance Workplace (TIW) Group are using a private cloud to drive productivity
and to build specific solutions for the demanding London insurance market.

9

“5G: A Technology Vision,” Huawei Technologies Co. Ltd., 2013.

10

T homas Bittman, “Private Cloud Matures, Hybrid Cloud Is Next,” Gartner, October 2013.

8

I N N O VAT O R S T O R Y

TIW Group"More than 2,500 users in over
300 companies around the world
are using our solutions to provide
secure, collaborative workplaces
where documents, video files,
structured and unstructured data
can be uploaded, viewed, acted uponand downloaded, with in excess of 5
million document transactions taking
place per year.”
WARREN GUNN, TECHNICAL DIRECTOR, TIW GROUP
LIMITEDFIGURE 1.6: TIW GroupTIW Group (TIW) was formed in 2005 with a vision to provide a digital platform to support
the London insurance and reinsurance markets. Since then, TIW has played a prominent rolein assisting with insurance reforms, regulations, and, in particular, the processing of London
market risks, premiums, and claims.
Much of the central activity in the insurance market is based on communicating via documents
often as attachments to emails. TIW wanted to provide a secure, accessible, and web-based
environment where its clients—underwriters, brokers, and others—could collaborate by easily
sharing documents, eliminating the need to create unnecessary duplicates. Working with paperbased folders or documents randomly stored across network drives, shared mailboxes, publicfolders or embedded in back-office applications was proving to be challenging and inefficient.
These, combined with location and time of day, were often barriers to effective collaboration.
Further challenges for clients included organizing their business to operate more efficiently,
observing company processes and procedures and, at one of the most basic levels, simply filingemails to a shared environment.
TIW’s platform provides an intuitive interface for its clients to manage documents of all types
in a highly secure manner while offering remote, ad hoc and mobile access to content. The
Insurance Workplace is a scalable and flexible content management platform hosted privately
in the Cloud. For TIW’s clients, the simplicity of The Insurance Workplace is a central factor toits success, as are the text indexing and security capabilities. More than 2,500 users from allover the world and over 300 companies are now using The Insurance Workplace, which canbe accessed securely over the Internet in a private cloud environment. The solution provides
secure, collaborative workspaces where documents can be uploaded, viewed, acted upon anddownloaded, with in excess of 5 million document transactions taking place each year.
9CHAPTER 1

Mobility Opens up New Markets
Like the Cloud, people are increasingly relying on mobile phones in their daily lives.
The prevalence of mobile phones in both developing and developed economies
demonstrates the extent to which they have become ingrained in our culture. Currently,
there are almost as many mobile subscriptions as there are people in the world. The
number of mobile connections is projected to rise to 8.5 billion by 2018.11 In the very
near future, there will be more people accessing the Internet on mobile devices than on
personal computers.12

Continuous High Growth of Mobile Broadband*Compound Annual Growth Rate

Americas

Arab States

460 MILLION SUBSCRIPTIONS

71 MILLION SUBSCRIPTIONS

48% PENETRATION

19% PENETRATION

28% CAGR* (2010-2013)

55% CAGR (2010-2013)

EuropeAfrica422 MILLION SUBSCRIPTIONS

93 MILLION SUBSCRIPTIONS

68% PENETRATION

11% PENETRATION

33% CAGR (2010-2013)

82% CAGR (2010-2013)

Commonwealth of
Independent States

895 MILLION SUBSCRIPTIONS

129 MILLION SUBSCRIPTIONS

22% PENETRATION

46% PENETRATION

45% CAGR (2010-2013)

Asia-Pacific

27% CAGR (2010-2013)

FIGURE 1.7: Almost as Many Mobile Subscriptions as People in the World13

Mobile devices and apps are reshaping the financial industry. Today’s consumer hasaccess to a wide variety of technologies, but mobile devices like smartphones and tabletsin particular, are revolutionizing the digital experience. Consumers are increasingly
using mobile phones to complete financial services transactions in banking, payments,budgeting, and shopping. Statistics indicate that consumers are ready for digital financialtransactions and new models of engagement. In total, 51 percent of smartphone owners
have used mobile banking in the past 12 months, up from 48 percent a year earlier.14
As the popularity of mobile retail rises, a digital marketplace will offer a range oftechnologies that support mobile transactions. Mobile payments and Mobile Financial
Services (MFS) will become integral to the functions of financial institutions, banks, andglobal retailers. Devices will transform into digital wallets, and even in some instances,
11“ Market Trends: Where to Find Opportunities for Mobile Solutions in Vertical Industries,” Gartner, July 2014.

12

 rank Gens, “IDC Predictions 2013: Competing on the 3rd Platform,” IDC, 2012, http://www.idc.com/research/Predictions13/
F
downloadable/238044.pdf (accessed February 2014).

13

Ibid.

14“ Consumers and Mobile Financial Services 2014,” The Board of Governors of the Federal Reserve, March 2014, http://www.
federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf (accessed March 2015).

10

DIGITAL DISRUPTION

mobile point-of-sale terminals. It is predicted that digital banking cards will be embedded
in mobile devices and used by 70 percent of physical bank card users.15 In addition to card
readers, QR codes and Near Field Communications (NFC), a wireless communications
technology that enables mobile devices to communicate based on proximity, will allow
for widespread mobile payment at point-of-sales. Apple Inc. has already launched Apple
Pay, which allows consumers to make purchases using their iPhones ®, and Google isoffering similar services for Android ® devices.

FIGURE 1.8: Authentication Through Biometrics

Other pioneering technologies like biometrics and beacon technology present moresophisticated ways to exchange, identify, and protect customer information using
mobile devices. Biometric identification, by fingerprint, eye scan, or voice activation isalready available on devices in the market, including the iPhone 6S™and Samsung Galaxy
S6™. Beacons are a small, low-cost piece of hardware that use network connections
to transmit messages directly to a smartphone or tablet. They make mobile devices“smarter” by allowing for background positioning and proximity detection. As a payment
method that uses NFC as well as Bluetooth and Wi-Fi to connect a mobile device toa point-of-sale terminal, Apple’s iBeacon is already demonstrating how automatic andseamless payment will be in the future.16
In the digital world, FIs will be required to deliver a range of products and services using
digital channels, such as mobile, or they risk being marginalized as utility providers.
Many institutions are realizing this and making investments in mobility a top priority.

15“ Will Retailers be Ready for EMV by Oct 2015?” Payments Leader, 2014, http://www.paymentsleader.com/will-retailers-beready-for-emv-by-oct-2015/ (accessed August 2015).

16

 elly Hodgkins, “Apple Investigating iBeacon-Assisted Mobile Payment Methods,” MacRumors, January 16, 2014, http://www.
K
macrumors.com/2014/01/16/ibeacon-mobile-payments/ (accessed March 2015).

11

CHAPTER 1

One way that firms can achieve this is to partner with other providers in the digital
ecosystem. Toronto Dominion Bank in Canada, for example, has partnered with Moven ®
to distribute a banking and budgeting app that provides greater transparency into
finances by tracking payments and monitoring banking activities using a mobile phone.
This partnership is win-win, providing the bank with a contemporary, functional app andgiving Moven access to a nationwide bank’s established customer base.17 Partneringwith innovation hubs to develop these services is an effective way to gain exposure to
new technology-driven services and tap into technical expertise.

FIGURE 1.9: Moven

Mobile technology presents pure opportunity in financial services. A typical transaction
at a bank costs 50 times that of a mobile transaction—so significant cost savings canbe realized by offering mobile services.18 If banks reduced their physical branches,
the savings in rent, salaries, and equipment would drive up earnings by an averageof 2.7 percent. In emerging markets, mobility has introduced new business models,
including the establishment of payment institutions that are not subject to the same
regulations as established banks. Banks in developing markets are much more open to
partnering to develop mobile banking products and services. In the digital world, the2.5 billion consumers worldwide who currently do not have access to bank accounts(“the underbanked”) will be empowered to participate in the mobile and social
financial system.19
In the following interview, The PrivateBank ® is exploring the application of emerging
technologies like mobile access, digitalization, and analytics, to drive efficiency anddeliver superior customer service. For The PrivateBank, digital transformation “is ajourney that requires vision, focus, and persistence.”17

 om Groenfeldt, “TD Partners With Moven For Mobile Money Management,” Forbes, December 2014, http://www.forbes.
Tcom/sites/tomgroenfeldt/2014/12/08/td-partners-with-moven-for-mobile-money-management/ (accessed March 2015).

18

David Berman, “Bricks, Mortar and Beyond,” The Globe and Mail, August 29, 2015.

19

 sli Demirguc-Kunt and Leora Klapper, “Measuring Financial Inclusion: The Global Findex Database, World Bank,” April
A
2012.

12

TRANSFORMATION IN ACTION

The PrivateBank
The PrivateBank strives to advance the goals of its clients by delivering
compelling commercial and personal banking and wealth management
solutions through a high-touch relationship. The PrivateBank serves
entrepreneurial middle market businesses, their executives and theiremployees, as well as the cities and neighborhoods where we live
and work.

FIGURE 1.10: The PrivateBank

What follows is an excerpt from an interview with Dean Haacker, Chief Technology Officer andManaging Director of The PrivateBank, and Tom Jenkins, Executive Chairman of OpenText.
TOM JENKINS: Banking has had an

beginning to look at opportunities for increased
revenue and improved client services as driving
the next range of transformational projects.

interesting decade. It’s been volatile,
governed by regulations, and innovative—
all at the same time. Give us a sense ofwhat it's been like to manage digitaltransformation in this kind of environment.

Digital transformation, or “digitalization” as
the bank calls it, replaces paper-based manual
processes with digital (or electronic) content
and optimized, automated processes. We’ve put
a new twist on the old principles of Business
Process Reengineering and Lean Six Sigma withmodern technology. For example, we’ve just
implemented a new deposit origination process

DEAN HAACKER: We're still in the early stagesof digital transformation at The PrivateBank. If
this were a baseball game, we’d be in the third
inning. Regulatory compliance has driven someof the first changes that we've made, but we're

13

TRANSFORMATION IN ACTION

for clients who want to set up a new accountwith us. This was a manual process in thepast, and we’ve automated and simplified it sothat clients can use a digital signature and therequired documents flow through the back-end
processes according to a workflow to verify aclient before we set up an account.

our branch offices. We have modern, intuitive
websites and mobile apps that enable digitalconsumers to manage their money, wherever
and whenever they need to. As well, we’remonitoring trends and assessing innovations in
mobile payments and exploring how “cardlesscash” can deliver new, convenient, and securesolutions. We are also enabling our commercial
clients to integrate their Enterprise Resource
Planning (ERP) systems with our core banking
services, like ACH (Automated Clearing House)
and wire transfers, using EDI (Electronic
Data Interchange) and SWIFT messaging tofacilitate end-to-end integration and cycle
time improvements.

What are some of the benefits you’rerealizing from digital transformation?

The benefits of digitalization can be describedusing the “Five Cs”: compliance, cost reduction,
collaboration, cycle time, and customer
satisfaction. Digitalization has had a positive
impact on both the company and our clientsin terms of the Five Cs. Back-office processing
for underwriting, commercial loans, and otherbanking products and services have historically
been manual and paper based. We print an
estimated 20 million pages each year, which isabout 17,000 pages per employee. Our content
management system helps us reduce paperand courier costs and increase productivity
by allowing users to access documents online
instead of going to filing cabinets locatedin remote vaults. Digitalization is as muchabout making sure our business documents
are compliant with industry and company
standards as it is about improving efficiency.
Banks are required to store and archive
pertinent data safely and securely. And finally,
digitalization allows for systematic and effective
collaboration and dissemination of information
throughout the bank.

Give us a sense of your back-end processes.
How do you equip your people to maintainclient relationships?

The PrivateBank prides itself on having avery distinct and close relationship with ourclients. About two-thirds of our employees
are client facing, so we have several hundred
relationship managers. We strive to give ourrelationship managers the right information attheir fingertips, so that when they meet withour clients, they’re better able to understandand anticipate their needs. We manage a
360-degree view of our clients using anenterprise data warehouse in combination with
our Customer Relationship Management (CRM)
and content management systems. This gives
us a single source of truth for client banking
information. We’ve also developed a custom
application that links the data warehouse
Tell us about what's going on in the front
with our clients’ commercial loan documents
end with customer service driving revenue. stored in our system. This integration ensures
What are you being driven to do by
the required metadata is systematicallycustomers?
populated with little to no effort from our
We have an online channel called “The Palladian relationship managers.
PrivateBank” (www.palladianprivatebank.com),which is specially designed for clients who prefer What innovative technologies are you
using to get to know your clients better?
an online-only banking experience. Clients caninitiate a new relationship with the bank without The key strategic areas that we're focused onever stepping foot inside one ofare digitalization, analytics, and mobility.

14

TRANSFORMATION IN ACTION

generations as well that believe they shouldbe able to do what they want to do wherever
they are. So we support our clients through our
website and through our mobile apps that run
on tablets and phones, Android and iOS—sothat they can take care of all their needs without
ever setting foot in one of our branches.

As far as analytics goes, we’re building on
what we've already got in our enterprise data
warehouse and taking it to the next level. The
efficient acquisition, cleansing, classification,
distribution and archiving of information isabsolutely critical to client engagement—
and digital leadership as well. When proper
information management and analytics areapplied, data transforms into information, andthen knowledge, which eventually becomes
wisdom. This wisdom is what separates thewinners from the losers in the digital economy.
Our collective wisdom enables superior client
relationship management that differentiates us
from competitors in the market.

When you introduce an app, do you roll
it out across the whole bank or do you
release to a small group first?

Let me answer this with an example. We
recently launched a Bring-Your-Own-Device(BYOD) program. We tested this with a pilotgroup of 50 people for a couple of years because
we need to maintain high standards in terms of
I’m fascinated by your approach of building security, convenience, and efficiency. We havea relationship through insight. As we allan even smaller group of a dozen people thatknow, with data analytics, you can be more are working with us on the latest releases. As
predictive with a larger data set, and yourwe perfect these, we launch them across therelationship or case managers can be better bank to anyone who is interested, and so fromprepared to interact with clients.
that perspective, they are opt in. Depending
It can be difficult to find a balance between
on their success, after the bugs are worked
too much information and the right amountout, these solutions become available acrossof information needed to get the job done. We
the organization.
have a full range of metadata that we've definedfor our core banking information. I think it goes
Now tell me about compliance. As a bank,beyond this, though, to the unstructured data
you face a lot of regulatory requirements.
contained in loan applications, for example.
It's hard. It is very, very hard. We spend upwardsof 70 percent of our time playing defense from a
When you're using insight for relationship
technology perspective, whether it's regulatorybuilding, what does success look like?
or cybersecurity threats. We have to remain
Success happens when the client is happy. You
vigilant in protecting the bank and our clients’
have successful clients when you’re meeting
data and keep up with the latest changes andtheir needs and their business objectives. The
patches that addresses vulnerabilities. There arechallenge is to do it day after day, quarter
projects running that address specific regulatory
after quarter, and to continue to build thatneeds. For example, in the U.S., the Doddmomentum. At some point you need additional Frank regulations required us to change manytechnology and tools in order to help you get toprocesses and some of our systems to comply.
the next level.
It was one of the largest projects that we had in
the past year. There are many other regulations,
How are new technologies impacting
and we're always assessing new regulations toMillennials, both inside your organization
make sure that we stay compliant.
as well as across your customer base?

It’s not just the Millennials, it's the prior

15

TRANSFORMATION IN ACTION

Looking at Dodd-Frank, for instance,
how do you translate the regulatory
requirements to a step in a workflow
process? How do you bring the back office
to the front office?

private cloud. And the hosting or software
companies we use are subject to the same
regulations that we are, so we trust andverify that they're performing to the same
standards that we perform to ourselves.
We’re also assessing strategic opportunities
to use private or hybrid clouds for targeted
opportunities within our legal and regulatory
guidelines. There are three questions I ask
during these assessments: 1. “Is it secure?” 2.
“Is it integrated?” and 3. “Does it perform?” We
can move forward with the Cloud only when theanswer to each of these is “yes”.

It's a big challenge to keep everyone up to speedwith everything that they need to know in sucha complex environment. Fortunately, the bankhas professionals who are working in theseareas and helping to guide the work that wedo across the bank. Even though we outsourcesome operations, our vendors are an extensionof the bank and so we're responsible for making
sure our vendors follow the same protocols that
we do to maintain regulatory compliance. We
continue to work through that to understandwhere those risks are and how to mitigate them.
It’s a great challenge to maintain that level ofknowledge and visibility into all parts of ourarchitecture and the way we operate. But we dothat on a daily basis to protect against threatsthat occur every day.

What advice would you give to otherexecutives who are championing
transformation?

Transformation is a journey that requires vision,
focus, and persistence. Define your expected
outcomes and work backwards to lay out theplan to achieve them. Find the best people you
can, including vendors and partners, since thebest team usually wins. You will be tested again
and again. You cannot over communicate, so
perfect your elevator speech. Look for what
is missing; many know how to improve what’s
there but few can see what’s missing. Stay true
to your guiding principles and enjoy the ride!

I'm glad you said that. What I've noticed asa technology architect and algorithms guy
is that technology is only one part of a stepin a new process. So much of it depends on
training and effective change management.
When people are deploying, they often
focus more on getting the technology
implemented than on the end user. And it
has to be a combination of the two.

Thank you, Dean.

That's the trap that we find ourselves trying
to avoid. It’s interesting because often the first
response is "we need a system for that" or "weneed an app for that" when six other things haveto happen first before we implement or adopt
the technology.
How do you approach the Cloud within The
PrivateBank?

We don't actually say that we're in the Cloud;
we say that we're using an Application Service
Provider (ASP). In reality though, the ASP
configuration is not much different than a16

DIGITAL DISRUPTION

Social Expands Reach
As outlined in the interview above, technology has become embedded in many financial
aspects of our lives. Like mobile devices and the Cloud, social media is becoming a criticalchannel for consumer outreach. To remain competitive, financial companies will look
more frequently to this channel to support innovative ways to engage with customers
and deepen relationships. In the digital world, physical branch locations will be replacedby online presences with mobile and social access. Future generations will interact withbanks as part of a digital experience, instead of the traditional channel experience today.
As growth in social media penetration and adoption continues among consumers, social
media will become a permanent sales channel in banking and insurance.
A winning approach depends on the secure delivery of data, products, and services
across preferred consumer channels. Forward-thinking FIs are leveraging social
media sites like Facebook ® and Twitter ® to create more engaging experiences, provide
customer service, better understand customer preferences and sentiments, and sellmore targeted products and services. In fact, 75 percent of financial advisors today
rely on social media to connect to their customers and almost half (46 percent) expect
social media to play a more significant role in increasing networking opportunities,
streamlining customer experience, and improving customer acquisition. 20
One of the key drawbacks to current social media sites in financial services is a lack ofwillingness to share account information on available social media sites. This is due toconcerns around data privacy, security breaches, and non-compliance with regulations.
These challenges are exacerbated by the legacy technology infrastructures manyleading institutions have in place, which makes it difficult to support integration withsocial network sites or capabilities. Cost and risk constrain established FIs when they
are working with current systems to manage, integrate, analyze, and deliver data acrosschannels seamlessly—including mobile, social, and the Cloud. An increasing numberof financial services businesses are using Customer Experience Management (CEM)
platforms to control the creation, approval, and distribution of social media content.

The Financial Internet of Things
The IoT is the extension of the Internet, connecting us to millions of machines, sensors,and objects. By monitoring devices attached to people, animals, or objects, the IoT
automatically exchanges information over a network without requiring human-tohuman or human-to-computer interaction. Instead, data exchange is based on machineto-machine communications between personal identifiers and systems receiving thedata via the Internet. The IoT will transform the world as we know it, creating a giant,global network of devices and machines that are connected, communicating, and20“ Putnam Investments Survey on Social Media Points to growing importance for financial advisors to leverage social networks toconnect, communicate and cultivate,” Putnam Investments, October 2013, https://www.putnam.com/about-putnam/pressreleases/putnam-investments-survey-on-social-media-points.jsp (accessed March 2015).

17

CHAPTER 1

exchanging data. This market will see 50 billion devices connected by 2020 and a valueof $14.4 trillion. 21 Its potential impact on every industry is huge.
While the IoT is viewed by many as a nebulous, futuristic concept, in reality it alreadyexists: we wear pedometers, smart watches, and cameras; our pets are microchipped;
and we drive cars with built-in sensors. Thanks to the IoT, many of our everyday
appliances will soon have the ability to self-monitor and communicate with a network.
Over the next 10 years, billions of items will be connected via sensors.
The rapid growth of the IoT will be driven by low-cost sensors and beacons, cloudcomputing, analytics, and mobility. It promises a future in which every sector will
be part of a hyper-connected world. For the financial industry, the IoT will deliver
unprecedented levels of data-driven insight that could dramatically improve customer
engagement and experience, optimize process automation and performance, reducerisk, and quicken the pace of innovation. It will empower banks and insurance companies
to deliver truly personalized and tailored experiences to satisfy both their corporate andindividual clients. Products and services can be highly targeted. In the U.S., Fidelity ® ismarketing a “free Fidelity Market Monitor for Glass™” that tracks selected stock quotes
using Google Glass™. Other banks are experimenting with smart watches. 22 By providing
seamless connectivity, the IoT will facilitate new business models and revenu streams.
To capitalize on the power of the IoT and the massive volumes of data it will generate, FIs
will be required to become part of their customers’ digital ecosystems. To accommodate
the IoT, they will need to invest in new technology platforms, integrate emerging
technologies with legacy IT infrastructure, standardize their data across systems, andcreate dynamic and flexible processes to support new technologies and devices. With
this infrastructure in place, FIs can start to proactively create new models of engagementthat move beyond ATMs and credit cards to mobile and wearable devices and sensors
in homes and cars. Connecting consumers to other service providers will facilitate aseamless consumer experience along a complex and user-generated value chain—suchas researching and purchasing a car, applying for a loan, and getting insurance; booking
and funding a vacation complete with air travel and hotel; and comparative shopping for
mortgages and closing a deal on a new house. The IoT transforms the entire customer
experience into the end product.

21

Eric Openshaw and John Hagel, “Interoperability in the Disconnected World of Connected Things,” Wired, February 24,
2015, http://insights.wired.com/profiles/blogs/interoperability-in-the-disconnected-world-of-connected-things#ixzz3UBYIxPKh(accessed March 2015).

22

Val Srinivas, Sam Friedman, and Jim Eckenrode, “Mobile Financial Services,” Deloitte University Press, 2014.

18

DIGITAL DISRUPTION

Glasses link to the Internet
through a display screen

Wireless headset
connects with mobilephone

The D-shirt records heartrate, GPS, location, route,speed and altitude

Watch connects withsmartphone

Belt clip tracks motion
and sleep

Wristband tracks
motion and sleep

FIGURE 1.11: Consumers Connect to the IoT

FIs of the future will leverage consolidated consumer data to build loyalty, giving
consumers access to their personal finances and anticipating their needs based on
preferences, proximity, and behavior. Information from bank accounts, credit cards,
ATMs, savings, mortgages, pensions, and benefits will be aggregated to provide
consumers with real-time updates of their total wealth. Today’s banks use a range ofdata models to manage risk profiles, for example. Data from the IoT will enhance thesemodels and their ability to better understand and engage with customers.
Using the IoT, the insurance industry could shift from its current reimbursement model
to a preventative model based on individual behavior. Data from sensors and homemonitoring systems, such as security systems, provide real-time feedback. Predictive
analysis could be applied for more accurate assessments of hazards and risk to deliver
premiums that are much more personalized. 23 Telematics are already being used by U.S.
auto insurance companies Progressive and Travelers to calculate premiums based on
usage and driving behavior. 24 Services could expand to connect drivers with their auto
dealers and repair shops, exchanging data to notify users about upcoming maintenance.
There is opportunity here for FIs to both reduce premiums and lower their costs byusing IoT data to create competitive advantage.
23

 an Schutzer, “Impact of The Internet of Things on Financial Services,” CTO Corner, August 2014, http://www.bits.org/
Dpublications/CTO/CTOCornerAug2014.pdf (accessed March 2015).

24“ The Bank of Things,” Accenture, 2014.

19

CHAPTER 1

With massive amounts of data exchanged on the IoT, privacy, information security,and compliance become key concerns. Most firms are already the gatekeepers ofconfidential, personal information. With an explosion of information across the IoT, howwill these organizations, governments, and regulators be able to monitor and protect
personal data stored in the Cloud? The promise of value delivered to consumers will
have to be greater than the risks of identity theft or loss of personal information.
In the digital world, information is the new currency. The vast amounts of data that the
IoT will create will pose challenges for organizations in every industry. The IoT will enablebanks and insurance companies to gather even more granular information about theircustomers. Big data and analytics will play a key role in the value that the IoT delivers,
expanding services beyond today’s pricing models and product features.

Big Data and Analytics
The digital universe is expanding. The data we create and copy each year is doublingin size every two years. By 2020, the digital universe will reach 44 zettabytes, or 44
trillion gigabytes. 25 FIs face an increasing volume, velocity, and variety of information.
For most, this is not a trend but the reality of doing business.
Video

Image

Audio

Text/Numbers

Banking
Securities and Investment Services
Insurance
Discrete Manufacturing
Process Manufacturing
RetailWholesale
Professional Services
Consumer and Recreational Services
Healthcare
Transportation
Communications and Media
Utilities
Construction
Resource Industries
Government
Education
PenetrationHigh

MediumLow

FIGURE 1.12: Types of Data Generated and Stored by Sector 26

25“ The Digital Universe of Opportunities,” IDC, April 2014.

26“ Big data: The next frontier for innovation, competition, and productivity,” McKinsey Global Institute, McKinsey & Company,
2011.

20

DIGITAL DISRUPTION

To unlock the value of their information, FIs will be required to manage their data as
an asset. Advances in technology such as storage, processing power, and softwareare enabling organizations to mine their information. Many FIs are already investingin analytics capabilities to overcome silos and legacy systems, optimize wealthmanagement, improve decision-making and transparency, and gain a 360-degree viewof their customers.
Organizations in every industry are searching for ways to combine consumer
information from many sources to anticipate customer needs and deliver tailoredproducts and services. The world of business intelligence and reporting is shiftingits focus to embedded analytics, driven by the demand for built-in data visualization.
Analytics provide actionable intelligence. FIs can use analytics to segment customers
and identify which ones will be more responsive to cross-selling opportunities, and thenfine-tune campaigns to market to them effectively. In addition to providing customer
insights, analytics can be applied to forecast sales and predict market revenues, help
inform wealth and allocation decisions, monitor loan performance and credit risk,
uncover patterns that expose fraud, and for regulatory reporting.
Increasingly global regulations are requiring FIs to store information for longer
periods of time. To effectively manage and mitigate regulatory risk, they must be able
to consolidate and analyze information across diverse systems and sources. Text anddata mining can be used to identify anomalies that indicate non-compliance, valuations,credit worthiness, and market or stock volatility. Analytics can also reveal instances of
duplicated efforts or errors and opportunities for cost savings.
FIs are realizing the strategic importance of managing their information effectively.
The end goal is to unlock the potential of their information and provide more accessible
insights, through embedded intelligence in apps, workflows, and business processes. Ina dynamic environment that is impacted by market trends, regulatory flux, and changes
in consumer habits, a strategic approach helps FIs consolidate, standardize, regulate,
protect, and manage their information for competitive advantage and differentiation. In
the following feature, Temenos is doing just this—using analytics to meet the demandsof a more sophisticated customer, deliver a more engaging experience, and maintaintheir competitive edge.

21

I N N O VAT O R S T O R Y

Temenos“Our market was becoming moresophisticated and end users were starting
to expect a more intuitive experience.
As a result, we changed our reporting
strategy in order to maintain ourcompetitive edge.”
FABRICE BIDARD, PRODUCT MANAGER, TEMENOS

FIGURE 1.13: Temenos Mobile Dashboard

Temenos Group AG, headquartered in Geneva, Switzerland, is an industry leader in the
global provision of private wealth and asset management solutions and services. Temenos
provides a comprehensive range of components for portfolio management, client
relationship management, advisory, compliance, risk, and analytics to firms in the financial
services industry.
Temenos wanted to offer its private wealth management clients access to integrated
reports of portfolio and investment information online in real time. Their existing reporting
solution did not provide an intuitive user interface or the modern technology features that
their client organizations expected. To deliver a more intuitive and satisfying end-user
experience, Temenos developed a solution that would give clients online access to wealthand asset management information using a more attractive, sophisticated, and web-based
reporting interface.
Because the solution is based on an open architecture, it integrates easily with current
systems. Organizations are able to embed the interface directly into applications andprovide users with a seamless and user-friendly experience. Clients are able to deliver
brochure-quality, “picture perfect” reports—such as asset reports, currency view,
portfolio performance, projected cash flow, and recent transaction summaries—to meetthe discerning needs of their high-net-worth individuals. In addition, reports are produced
to monitor compliance with governmental regulations, such as Markets in Financial
Instruments Directive (MiFID), helping clients comply with the legal and regulatoryenvironments at each step in their operations. The solution has made Temenos morecompetitive in the private wealth and asset management market. As a digital innovator,
Temenos plans to incorporate analytics into its solutions to provide web-based Online
Analytical Processing (OLAP) so clients can interactively explore information, build multidimensional reports, and improve decision-making capabilities.
22

DIGITAL DISRUPTION

Automation and Artificial Intelligence
Automation, robotics, and machine intelligence will permeate our daily lives by 2025
and impact a wide range of industries. 27 New research shows that nearly half of all jobs
will be susceptible to automation over the next two decades. 28 The combination ofadvances in robotics and automation, along with rising wages in developing countries,
has encouraged organizations to switch gears from outsourcing and re-invest in local
manufacturing and services. The more processes are automated, the less need there is
to outsource to countries with cheap labor.
In the digital world, an increasing reliance on self-service technology, sensors, machineto-machine communication, and Artificial Intelligence (AI) will transform the workplace
as menial tasks and even non-routine jobs are digitalized and automated through robotics
and process automation. These systems will make FIs more efficient by freeing people
from doing tasks that can be completed by computers. In many cases, the intelligencethat these systems deliver will be more accurate and immediate.

FIGURE 1.14: AI - The Rise of the Robo Advisor

AI relies on computer systems to perform tasks that normally require human intelligence,
supported by capabilities like visual perception, speech recognition, and decisionmaking. Advances in analytics are making AI systems easier to develop. When combinedwith analytics, AI has the potential to transform the financial services industry throughsimulated interactive agents (for market information), expert systems (for real-time
advice), and neural networks (for analysis and portfolio generation).
27

A aron Smith and Janna Anderson, “AI, Robotics, and the Future of Jobs,” Pew Research Center, August 2014, http://www.
pewinternet.org/2014/08/06/future-of-jobs/ (accessed April 2015).

28

 avid R. Wheeler, “Silicon Valley to millennials: Drop dead,” CNN, March 18, 2015, http://us.cnn.com/2015/03/18/opinions/D
wheeler-silicon-valley-jobs/?iid=ob_article_organicsidebar_expansion&iref=obnetwork (accessed April 2015).

23

CHAPTER 1

In the future, we will rely on automated financial advisors (called “robo advisors”) thatmonitor stock prices and trends, make recommendations about investment portfolios,
and manage transactions. Our digital wallets will connect to analytics information about
our personal spending habits and finances. Automated insurance agents will help us
make decisions based on the most suitable policies. All of these digital services will beavailable to a wider customer base at lower fees. The objective is to improve efficiency
in helping consumers make better and more informed decisions about their money—
from any place at any time.
The vision of highly intelligent and automated financial services is becoming a reality.
One of the pioneers in this field is a personal financial management start-up based in
San Francisco called Wallet.AI ®. Wallet.AI is an app that combines AI and analytics
to leverage information gleaned from many sources, including contextual awareness,
spending habits, bank balances, and more. Based on this data, it delivers relevant insight
to consumers based on their individual spending and saving behavior.
AI uses data to connect machines and people and is already changing the way weinteract with technology. AI applications will continue to evolve and as they interact
with other systems (like the IoT), information security and personal privacy will become
key concerns. The consumer will most likely determine the happy medium, where theintegrity of the data exchanged is equal to the convenience, accessibility, and otheradvantages provided by the automated financial service.
Technologies that automate processes boost efficiency so that organizations candeliver results more quickly. Sound process automation solutions equip modern
financial institutions to be agile, adaptable, and able to respond rapidly to the needs oftheir markets.

Digital Changes Everything
Whether we like it or not, digital is now a part of everything we do—as individuals, asbusiness leaders, and as a society. In all industries, digital disruptions are converging
and impacting how we live our lives. Changes are being driven by a market that is open,
distributed, and highly entrepreneurial. To succeed in this digital world, FIs will needto determine the value of these new disruptive technologies and how they can expand
their abilities to compete in their markets.
The new digital reality extends beyond the firewall (and IT departments) to mobile
devices, social media, analytics, and the IoT. Old business models no longer apply.
Instead, FIs need to adopt a digital business strategy to satisfy their digital customers,
and they will have to do this quickly to lead their markets and remain competitive.
Information lies at the heart of digital transformation. Data forms the basis of consumer
and partner relationships and provides the insights required to differentiate products

24

DIGITAL DISRUPTION

and services and digitalize key processes as well as the entire customer journey. The
good news is that FIs are taking steps to modernize their systems, digitalize theirprocesses, and unlock the value of the vast stores of information they collect.
Based on the progress of the past and the present rate of change, how will digitaltechnology transform business models to meet the needs of financial consumers,
partners, and marketing channels in the future? What will the financial enterprise look
like in the digital world? How will it operate? The following chapter examines thesequestions in greater detail.

25

C H A P T E R

DIGITAL BUSINESS

2

CHAPTER 2

C HAPTER 2

Digital Business“No business can afford to ignore or underplay the impact of technology-driven disruptions
that are transforming what it means to be a business in a digital world.” – Gartner 20131
For decades, Financial Institutions (FIs) in mature economies have dominated theirmarkets, relying on a strong physical presence based on a network of bricks-and-mortar
service centers. Significant capital investments in branch offices, staff, and proprietary
IT infrastructure created an effective barrier to new competition. Bank branches, forexample, made it convenient for customers to visit in person and helped businesses
understand their customers’ unique financial needs, foster personal relationships withthem, and sell products to fill those needs.
But digital technology and changes in customer preferences have turned the physicalbranch network into a burden. The current bricks-and-mortar infrastructure isincreasingly irrelevant to Millennial customers. Full-service banks, for example, areexpected to experience a 35 percent loss of market share by the year 2020, withbusiness shifting to entrants from the retail and technology sectors. 2 To meet theneeds of the next generation and differentiate themselves in a highly competitiveenvironment, FIs will be required to adopt digital business models to operate withefficiency and agility.
For FIs to keep market share in the digital world, all of their major operating functions
will be digital. In order to digitalize every process, FIs will need to re-configure theirbusinesses to ensure competitiveness and effectiveness—from the back office throughto the front office. But what exactly is a digital business? What enables it? What are its
primary characteristics? What is the platform for success? In this chapter, we explore
what it means to be a successful digital business in an evolving financial services sector.

The Traditional Enterprise

Manufacturer

Supplier

Retailer
FIGURE 2.1: A Traditional Linear Value Chain

1

“Gartner Top Predictions 2014: Plan for a Disruptive, but Constructive Future,” Gartner, Inc., October 7, 2013.

2

Jim Marous, “Traditional Banks at Risk Due to Digital Disruption,” The Financial Brand, November 13, 2013.

28

CustomerDIGITAL BUSINESSA digital business is more than just a business with digital products that are electronically
distributed: it’s a business in which digital technology is both pervasive and central toits overall success. A digital business is created when an organization uses digital assets
and/or capabilities to create digital products, services, and customer experiences,typically conducted through digital channels and communities. 3 This means that all along
the value chain—from the creation of products and services to their consumption—
employees, consumers, partners, and processes are reliant on digital technology for easy
access to information, constant connectivity, and immediacy of insight.
A digital business is characterized by an open, flexible value chain. In the transition toa digital business, FIs need to re-envision their business not as a standalone entity witha linear value chain (as illustrated in Figure 2.1), but as part of an extended enterpriseecosystem of suppliers from which customers assemble products and services according
to their needs (Figure 2.2).4 To meet their digital consumers’ needs, FIs will leverage thepower of networks, forming strategic partnerships and playing a critical role in developing
a digital ecosystem of providers for financial services.
Electronics Devices

Food

SUMER GOODSCON

ADVICEHOM
E

SYSTEM SERVICES
ECO

Loyalty
Programs

Comparisons

Proximity
Marketing

Recommendations
NSU M ERS

ES

VA
L

CE

ISH

UE

Ticketing

C
AC

AN

Payments

Newspapers,
Magazines,
and Books

BL

SUR

ING

CO

Transportation

PU

HEALTH & IN

Car Insurance

N
IO
AT
RT
O
SP

Security

Auto

TR
AN

& EDUCATIONReal Estate

S

TR

AV
E

L&

Flights

L EI

SUR

COM

E

Hotels

MU

I
AT
N IC

ON
Internet

Phone

FIGURE 2.2: An Extended Financial Services Ecosystem 5

3Jim Marous, “Traditional Banks at Risk Due to Digital Disruption,” The Financial Brand, November 13, 2013.

4

Nigel Fenwick and Martin Gill, “The Future of Business Is Digital,” Forrester Research, March 10, 2014.

5

“ The Every Day Bank,” Accenture, 2014.

29

CHAPTER 2

A defining characteristic of the digital financial services business is its ability to buildand operate within this digital ecosystem. The digital ecosystem offers a broad rangeof solutions, delivering a complete, personalized experience that meets the customer’sunique needs. As part of a larger ecosystem, companies can extend their capabilities,
innovate to develop new products and services, and explore new revenue streams.
By tapping into the wealth of transactional data available within the ecosystem,
organizations will be well equipped to gain a holistic view of the customer, build a better
customer experience, and continue to innovate and offer more targeted solutions
to customers.
Success as a financial service provider will depend on a firm’s ability to immerse its
service, products, or branch into the lives of its customers—and become a primary digital
resource. To this end, building and maintaining a strong ecosystem of suppliers is critical.
Leveraging this ecosystem to drive new opportunities will be critical for business growth.
Before we examine the characteristics of a digital financial business, let’s explore thecontext that is creating opportunities for digital transformation.

The Drivers of Digital Transformation
The financial services industry has undergone major changes in the last decade. The
financial crisis of 2008 wreaked havoc in the global financial system as banks became
insolvent or received bailouts. A tsunami of regulations hit the global banking sector toprevent a similar crisis from happening again. As a result, today’s financial institutions
are struggling to generate sustainable growth and return to pre-crisis profit levels. In an
industry that is marked by volatility, megamergers, and decreasing margins, there is a
growing backlash against the larger, established financial institutions. Technically savvy
consumers are turning to non-traditional, digital channels for financial services that arecheaper, faster, and better. All of these market conditions are combining with digital
disruption to create the perfect storm for digital transformation.
The previous chapter highlighted the rapid pace of digitalization and how this wave ofdigital disruption is stronger and faster than disruptions of the past. In the digital world,
the financial services enterprise will either evolve or it will become irrelevant. Several
market factors are at work accelerating the adoption of digital technologies and, inparticular, driving the transformation of firms into digital businesses. These include: The nature of digital technology
 Generation Z Globalization and emerging markets
 Regulatory pressures
 The demands of the digital consumer
 Growing requirements for operational agility

30

DIGITAL BUSINESS

Generation Z

Gen Z

DigitalTechnology

The Digital
Customer

Drivers of Digital
Transformation
Regulatory
Pressure

Operational
Agility

Globalization

FIGURE 2.3: Drivers of Digital Transformation 6

The Nature of Digital Technology
Traditional FIs need to leverage digital technology to access new opportunities andcompete with disruptive competition. Digital business models leverage common,
public technology that is less expensive to implement and maintain and supports rapid
innovation. Their data structures are open and flexible. Application Programming
Interfaces (APIs) allow software applications to easily interface and connect with third
parties and external systems. All of these characteristics help to make businesses moreagile, innovative, and responsive to changing customer expectations.
Central to digital transformation is the ability to facilitate direct, Peer-to-Peer (P2P)
communication, collaboration, and sharing, without requiring an intermediary. By
providing direct, unrestricted access to information, knowledge, and resources, digitaltechnologies empower both businesses and individuals in ways not previously possible
or even imaginable. Anyone with a web-enabled device can connect to a global networkof expertise. They can share ideas, collaborate, and innovate. Organizations can accessnew channels for marketing and distribution and work with business partners locatedanywhere in the world. In this way, digital technologies are disintermediating the
traditional financial institutions and their business models.

6

Connie Moore, “The Process-Driven Business of 2020,” Forrester Research, April 16, 2012.

31

CHAPTER 2

As individuals are empowered with new ways of working, traditional channels—andthose who control them—hold less importance. The nimble players are able to market
globally through inexpensive and accessible online channels, sell through a mobile app,and digitally distribute. If they are missing skills or expertise, they can partner withanother vendor. All this can be done in ways that deliver new value to the customer.
Many established market leaders are encumbered by legacy IT systems and culturesthat prevent them from reacting to new opportunities with agility. In shifting power andinfluence away from traditional sources, digital technologies are introducing opportunity
to the masses. Digitalization is not simply a defensive strategy. Established FIs mustacknowledge, respond to, and allow digital technologies to transform their operations
from the inside-out if they want to stay competitive and relevant in the digital world.
In the following feature, Black Sea Trade and Development Bank is reinventing
itself as a digital business using Enterprise Information Management (EIM) as atransformational technology.

Generation Z
In the digital world, FIs will have to cater to the younger generations, including
Generation Z. Generation Z is the first “digital” generation to enter the workforce.
Having grown up with easy access to the Internet and persistent connectivity, they aretechnically savvy, earning them the nickname “digital natives”.7 Technology is central to
the way Generation Z works and plays. They use digital technologies like social media toshare information and interact with peers. Constant connectedness is a fact of life forthis group, they function on the immediacy of real-time insight and action.
In 2020, Generation Z will expect to continue working in ways that are open, social,mobile, and flexible rather than fixed according to a hierarchical structure. They will
want to use the same tools in the workplace that they use at home to communicate,collaborate, and share information. If the enterprise does not permit access tothese digital tools, Generation Z will bring them inside the firewall, circumventing
IT and established governance rules and policies. Not offering them as part of the IT
infrastructure will not be an option.
As they enter the workforce, Generation Z will introduce the globalization of talent.
While it works to support its existing workforce, the enterprise will need to change its
business models and approach to recruiting, retaining, and motivating this workforce.
The good news is that, if they are empowered, this highly agile workforce will help to
guide the enterprise on its journey to digital transformation.

7

G eneration Z: http://en.wikipedia.org/wiki/Generation_Z (accessed July, 2014).

32

I N N O VAT O R S T O R YBlack Sea Trade & Development Bank“The prime objective of the
Bank is to have a single view
and monitoring capability ofoperations in a single place, bybuilding an EIM system.”
MARKOS DOLOPIKOS, PRINCIPALOFFICER, IT, THE BLACK SEA TRADE AND
DEVELOPMENT BANKFIGURE 2.4: Black Sea Trade & Development Bank

The Black Sea Trade and Development Bank (BSTDB), an international financial institution
with headquarters in Thessaloniki, Greece, was established by Albania, Armenia, Azerbaijan,
Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. BSTDB started
operations in June 1999 and has authorized capital of €3.45 billion ($3.88 billion U.S). The
Bank supports economic development and regional cooperation in the Black Sea Region
through trade and project finance lending, guarantees, and equity participation in private
enterprises and public entities in the member countries.
BSTDB was challenged by the ever-increasing volume and complexity of documentation,siloed information, and a workforce that was often on the road. They needed a solutionthat could manage numerous and varied documents, connect people and data acrossthe enterprise, and provide employees with mobile access to information—all while
meeting compliance standards. To address this, BSTDB sought out a flexible EIM
suite—a combination of document and records management, mobile, file sharing, andcollaboration solutions.
With the EIM suite in place, BTSDB now has a 360-degree view of various types of
information from many sources and locations; employees have secure, auditable accessto information while on the move from their own device, making them more responsive
to customer needs; and clients are able to upload completed applications and supporting
documents directly to a secure workspace easily through a web interface. The Bank
has further increased efficiencies and shortened processing times by applying digital
signatures to automate business processes. This has eliminated delays on approvals andresulted in shorter processing times and improved customer relationships. Continuing toleverage the solution’s extensive mobile information management capabilities, BSTDB
is preparing to further improve operations by implementing a Bring-Your-Own-Device(BYOD) program that will allow both customers and staff to access dashboards containing
real-time information using mobile devices.
33

CHAPTER 2

Globalization
The relationship between globalization and digital disruption is interdependent: eachone fuels the growth of the other, and both work to shape digital business. Globalization
introduces great opportunity for FIs to enter new markets, consolidate their products
and services, sell anywhere in the world, and create infrastructures that support
operations around the clock. At the same time, it brings new competitive threats. As
globalization continues to rise, there will be a global shift in capital, economic power, andinfluence from older economies in North America and Europe to emerging economies.
DATAGR APHICCountries and Consumers

Rank Shift in GDP
2010 vs 2020; PPP in I$

TOP 10 BIGGE ST ECONOMIES: 2010 VS 2020
GDP 2020
PPP in I$

GDP in 2020
I$ bn
1,000 +
100–1000
10–100
0–10
Not Illustrated

Rank

2010

2020

1

United States

2

China

United States

3

Japan

India

4

India

Japan

5

Germany

Russia6

RussiaGermany

7

United Kingdom

8

FranceUnited Kingdom

9BrazilFrance10

Italy

Mexico11

Mexico12South Korea

13

Spain

14

CanadaCanada15

Indonesia

Spain

China

BrazilSouth Korea
Indonesia
Italy

FIGURE 2.5: Top 10 Largest Economies In 2020 8

By the year 2020, it is expected that Brazil, Russia, India, and China (collectively known
as BRIC countries) will be increasingly important centers of economic influence. The
flow of wealth into countries like China and India has produced stronger economies.
Momentum continues to favor emerging markets: a second wave of globalization is
supplanting developed nations in both the U.S. and Europe as the dominant contributors
to global economic growth.
© 2010 Euromonitor International

Organizations in developing regions are expanding their operations and extending their
recruitment efforts beyond their local ecosystems. They will have strong middle classes
with significant purchasing power and will be sources of business innovation. A digitally
focused FI is well positioned to gain a presence in these markets, serve their customers,
and collaborate with businesses located there. It gives businesses the opportunity tohire people in these locales and effectively integrate employees and business processes
into a global infrastructure. They have the ability to leverage international tools,
knowledge, and networks to influence local decision-making processes. At the sametime, it introduces new policies and regulations.
8“ Top 10 largest economies in 2020,” Euromonitor International from IMP, July 7, 2010,
http://blog.euromonitor.com/2010/07/special-report-top-10-largest-economies-in-2020.html (accessed July 2014).

34

DIGITAL BUSINESSRegulatory Pressure
Finance is a highly regulated industry that is interconnected and relies on nationaland global economies. What happens in one economy often impacts many economies
on an international scale. For this reason, it is important for regulatory agencies tomaintain control over the standardized practices across systems, data, and processesof these institutions. Financial institutions are required to comply with global and local
regulations covering capital and liquidity, conduct of business, and financial crime.
Reporting and disclosure are costly, complex, and mandatory, and the penalties for
non-compliance are severe. In the financial industry, compliance will continue to be
expensive and challenging, and rules, regulations, and laws will come from many moreregulators from around the globe.
In the digital world, new and disruptive technologies will raise concerns around capital,
liquidity, consumer protection, security breaches, anti-money laundering, and overall risk
management. Emerging technologies will bring volumes of structured and unstructured
data inside the firewall. The Internet of Things (IoT) alone will introduce a wave of new
data types into the enterprise. FIs need to be prepared to govern this information before
it arrives. Growing regulatory pressures will require the digital enterprise to rethink
and reprioritize its strategies for compliance and risk management.
After the global financial crisis, compliance with new regulations cost the average bank
2.5 to 3.5 percent in pre-tax Return-on-Equity (RoE), which is significant consideringsome banks are struggling to achieve profitability levels above their cost of capital.9 In
some cases, regulatory-driven change accounts for more than 80 percent of the entire
corporate investment portfolio, and it is not sustainable to manage change on this scale
as a series of one-off tactical projects. In the face of mass disruption, the challenge facing
FIs is how to adopt a more strategic approach to managing regulatory-driven change,
while minimizing costs and future proofing operating models against the next wave ofregulations. Many of these regulations are emerging to protect the digital consumer.
With globalization and transactions across an international supply chain comes a greaterneed to comply. This need will grow as higher volumes of information and commerce areexchanged across borders. In the following feature, Volkswagen Finance China operates
in a complex, global environment with requirements to comply with Chinese law as wellas with German banking regulations due to its affiliation with its parent company.

9“ Banking 2020,” Accenture, 2013.

35

I N N O VAT O R S T O R Y

Volkswagen Finance China
Volkswagen Finance (China)
Co., Ltd. is China's first wholly
foreign-owned auto financecompany. Volkswagen Finance
China has been committed toproviding Chinese customers
with advanced auto financeproducts and high-quality
services since its founding in
September 2004.
FIGURE 2.6: Volkswagen Finance China

As a result of the rise of affluence in the Chinese market and the appeal of foreign car
brands, there has been an increase in the purchase of cars and a corresponding demand forautomotive financial services. Business for Volkswagen Finance China has been growing
rapidly in the past five years, and the corresponding data has increased by 800 percent(2010 – 2014). In the midst of this deluge of data, the company is required to comply withregulations in both its host country, China, and its country of origin, Germany. These
requirements include the need to store related documents for seven years in both paperand digital formats in support of the electronic disbursement process.
The company turned to an expansive information management solution to give it the agility
it requires to manage compliance data and processes—both now and into the future. The
solution helps to manage compliance using integrated records management, archiving,search and e-Discovery. The solution can handle large amounts of data and integrates
with other applications like email and its retail finance suite to minimize the risk and costassociated with compliance, while maximizing insight and efficiency across consolidated
data sources. As well as transparency into performance, the organization has been able
to find new value in this solution by reducing the time required to find documents by 50
percent, significantly improving productivity and time-to-compliance.

36

DIGITAL BUSINESS

Digital Consumers
We have entered the “Age of the Customer”—an age in which digital technology has
empowered the customer and shifted the balance of purchasing power to customers.10
Consumers now have the ability to extract price, quality, and service concessions fromthe world’s most powerful financial brands.11 What used to differentiate the enterprise—economies of scale, distribution strength, and brand—have faded in importance.
In their place, customer obsession is what gives firms dominance and drives theircompetitive advantage.
The rapid adoption of digital technologies has created the digital consumer. They
are ready for new models of engagement as they embrace branchless banks, onlinetransactions, mobile wallets, and bundled products and services—fueling a growing
digital ecosystem of financial (and non-financial) service providers. An increasing
number of emerging businesses are offering customers convenience, flexibility, andchoice, making the established institutions vulnerable to losing market share to newmarket entrants. In fact, Millennials will increasingly look to the companies they trust
for financial services, like Amazon and Google.
Consumers now expect more from their financial institutions than simple transactions.
They want digitally enabled services, from any place at any time, at their convenience.
They want more holistic services like investment and budgetary advice—in real time.
With smartphones in their pocket, they want to engage their financial institutions
through digital channels and touchpoints. There is evidence of this when comparing
the growth of online sales from 2012 and 2013 for banks in the U.S., as illustrated in
Figure 2.7.
2012
21 %
11 %

30 %

24 %
8%

25 %
15 %

Auto Loan

2013

Mortgage

Personal Loan

6%Home Equity Loan

FIGURE 2.7: Sales of Financial Products Shift to Online Channels

10Nigel Fenwick and Martin Gill, “The Future of Business is Digital,” Forrester Research, March 10, 2014.

11

 eorge F. Colony and Peter Burris, “Technology Management in the Age of the Customer,” Forrester Research, October
G
2013.

37

CHAPTER 2

Consumers are demanding personalized service and expect immediate gratificationand engaging experiences that satisfy. With client onboarding as a top priority, financialorganizations that offer a seamless end-to-end differentiated customer experience will
succeed in an emerging digital ecosystem. For customer experience to be seamless, theunderlying processes must be automated and streamlined.

Operational Agility
Creating an effective customer experience relies on process efficiency and operational
excellence. Operational excellence is becoming more important as digital customers havegrowing expectations for faster delivery of goods, increasing product personalization,and 24/7 engagement.
In the digital world, the FIs that are agile enough to innovate and seize market
opportunity will win market share. On average, one third of the enterprise’s businessprocesses rely on digital technology.12 In the very near future, smart machines andworkplace automation will remove mundane and repetitive tasks. Research shows that47 percent of U.S. jobs are susceptible to replacement by automation within the next
seven to 10 years.13 Electronic transaction processing has already removed the manuallabor involved in processing transactions.
Currently, only one-third of an organization’s business processes rely on digitaltechnology. In 2020, all of an organization’s information and processes will be digital,
moving the value of information beyond optimizing performance to create new products
and services and open up new sales channels. The benefits are substantial. An automatedmortgage application process, for example, can reduce costs by up to 70 percent. A
digital case management solution results in almost 40 percent improvement in the time
it takes to manage cases at a leading financial institution.14 Technologies that digitalize
processes boost efficiency so that organizations can deliver results more quickly.

The Components of a Digital Financial Institution
As digital technologies transform business operations, all major elements of thebusiness will be impacted. The components of the digital financial institution are alreadyemerging and include the Digital Business Network, Digital Engagement, and Digital
Governance and Security.

12S arah Murray, “CEO Briefing 2014 - The Global Agenda: Competing in a Digital World,” Accenture, 2014.

13

 olin Lewis, “Robots Are Starting to Make Offshoring Less Attractive,” Harvard Business Review, May 2014, https://hbr.
Corg/2014/05/robots-are-starting-to-make-offshoring-less-attractive/ (accessed April 2015).

14S arah Murray, “CEO Briefing 2014 - The Global Agenda: Competing in a Digital World,” Accenture, 2014.

38

DIGITAL BUSINESSThe Digital Supply Chain
In the digital world, consumers will drive interactions with financial services
organizations. They will expect greater customization of products, swift delivery ofservices, and an experience that is smooth and seamless. To fulfill this vision, digitalbusinesses will leverage information technology to support new levels of flexibility,
operational excellence, and exchange between partners, even those outside of financial
services, otherwise known as Business-to-Business (B2B) integration.
Future financial services business networks will consist of vibrant and collaborativeenvironments in which consumers, banks, insurance, investment companies, treasury
departments, and technology morph into a market-driven world requiring the rightinformation, in the right format, at the right time.15 These organizations will be part of an
ecosystem with the customer at the hub and leverage digital and mobile technologies todeliver both financial and non-financial services across many channels. The ecosystem
will be made up of a business network of partners and counterparties. Digital businessprocesses supported by a digital business network will be essential to success.
Technologies like Smart Process Applications (SPAs) and Dynamic Case Management(DCM), when combined with secure information exchange and B2B integration, willbring flexibility, greater agility and efficiency, and customization to the financial
services ecosystem.
Given the competitive landscape and the changing expectations of the digital customer,
it is important for traditional FIs to proactively evolve and grow their business. They
will need to adopt digital operating models to compete. In a globalized and highly
distributed environment, FIs will depend on B2B integration—technology andapplications for the automated exchange of transactions between broad networks ofpartners and counterparties. In the digital world, the network will harness the Cloudand offer full mobile access to deliver customer experiences that exceed expectation.

Digital Engagement
In the year 2020, digital will not just be a route to market; it will be the primary route tomarket. FIs will be required to connect directly with their customers to produce superior
customer experiences—reaching and engaging customers at every touchpoint. Digital
customers will bounce from device to device across relevant channels—discovering
products in online articles and community discussions, researching competitors,
downloading product information, completing online and mobile transactions, andengaging businesses through customer service portals. Each touchpoint provides an15

 ike Lacobucci, “Looking ahead to globalization 2020,” MultiLingual Computing, http://www.moravia.com/files/download/
M
Globalization2020_MultilingualComputing.pdf (accessed July 2014).

39

CHAPTER 2

opportunity to strengthen and tighten customer relations. To be successful, the digitalenterprise will provide its customers with a seamless buyer journey across manychannels to deliver what they need, when and where they need it.16
Websites

OnlineCatalogs

Digital Screens

Touch
Screens& Tablets

POS &Payment
SystemsOmni-Channel
Marketing
Near Field
Communications

Mobile Apps

Physical StoreSocial MediaFIGURE 2.8: Omni-Channel Marketing 17

As consumers engage across multiple channels, FIs will have to adopt an omni-channel
approach to deliver a consistent brand experience. Consumers regard brands as a single
entity and expect the same experience of its products, services, policies, processes,
and personality, regardless of channel. The key to effective engagement is consumer
intelligence. The ultimate goal of any service provider today is capturing a 360-degreeview of the customer’s financial situation to offer services and products that are timely
and compelling. As they acquire market share, digital disruptors are profiting from thecustomer data they are collecting. This will be where the future battle will be focused.
Every institution needs to transform into a digital business to leverage new businessmodels, re-invest itself through digital processes, and secure their access to thecustomer relationship.

16

Ron Rogowski, “The Unified Customer Experience Imperative,” Forrester Research, May 7, 2013.

17

 hristopher Hall, “Digital Signage and the ‘Store of the Future,'" Retail Customer Experience, Dec 10, 2013, http://www.
Cretailcustomerexperience.com/articles/digital-signage-and-the-store-of-the-future/ (accessed July 2014).

40

DIGITAL BUSINESSInternally, firms will rely on the use of digital technologies to deepen engagement with
their employees, largely made up of digital natives and Generation Z. New businessmodels and technologies require a different workforce, and FIs will need to transformtheir operations and cultures to attract, retain, and grow their workforces. To enable
this workforce, workplaces will depend on digital communications and collaborationin global conference calls, through instant messaging, and social communities, or byworking on shared documents. To succeed, FIs will need to empower frontline staff withdigital tools and technology they need to do their jobs, with digital expertise and support
at the executive level. Digital engagement is discussed in more detail in Chapter 4.

Digital Governance and Compliance
FIs are subject to laws, rules, and regulations that require strict compliance toprotect corporate assets. As digital technologies permeate the value chain, they are
producing enormous amounts of data and content. With growing volumes of dataand increasing opportunity for data theft, it will be crucial for organizations to havesound strategies and practices for information governance and security of private or
sensitive information. As the enterprise re-invents itself, business leaders will need to
articulate a digital strategy that balances innovation and growth with security and risk.
Information management will increasingly leverage digital technology for compliance,
good governance, and e-Discovery.

Making the Move to Digital
To remain relevant in the digital world and gain a sustainable competitive advantage, FIs
will be required to transform themselves into digital enterprises. Digital transformation
requires a radical overhaul of enterprise strategies, processes, products, services, andrelationships. EIM empowers organizations to make this journey. How? At a basic level,
it guides them through each phase of transformation, giving them effective ways tosimplify, transform, and accelerate their business. Each phase of digital transformation
is illustrated in the figure below.
1. Simplify. Every organization wants to simplify its business—and this is a constantchallenge. Shoring up core business operations to improve efficiency and profitability
is the first phase. Organizations must reduce costs and increase competitiveness bydigitalizing their information and processes. Most organizations are already working
toward simplifying their operations as “Present Day Followers”, as indicated in the
diagram below.

41

CHAPTER 2

Disruptive Innovation
3. Digital Leaders

Increase the speed ofbusiness throughcontinuous innovation
3. ACCELERATE

2. Digital Adapters

Transform businessplatforms and models
2. TRANSFORM

Drive efﬁciency
through digitalizationand simpliﬁed
processes

1. Present Day Followers

1. SIMPLIFY

FIGURE 2.9: Phases of Digital Transformation

2. Transform. Business processes need to be agile to adapt products, services, andoperations as customer expectations change—and they are changing. This requires
transforming information-based processes and platforms to support digital consumers,
a new workforce, a digital supply chain, and emerging technologies. To do this effectively,organizations will need to create an environment in which innovation thrives. Businessand technology leaders should be ready to take risks, follow digital strategies witheffective leadership, and define new models of engagement. Organizations in this phaseof transformation are already adapting to the requirements for future digitalization.
3. Accelerate. This describes the rate at which we must undertake these changes,
which may be daunting to some, but at the same time it presents every business inevery market with even greater opportunities to serve their customers, partners, andsuppliers. Every organization will be required to rethink the way that they’re engaging
with customers, how they facilitate the workforce, and the ways they’re integrating
and managing their information. The final phase of transformation relies on constantinnovation. This can only be achieved by increasing the speed of information delivery
through integrated systems. “Digital Leaders” have mastered this. They’re redesigningcustomer experiences, overhauling their approaches to information management,
rethinking their processes, and re-platforming their operations.
Many FIs are currently operating at the initial stage of digital transformation. The
following interview describes how an insurance company is leveraging digital technology
to transform their claims management process, improve their service levels, and produce
valuable efficiencies and cost savings.
42

TRANSFORMATION IN ACTION

A Multinational
Insurance Company
What follows is an excerpt from an interview with the manager ofsolutions architecture at a multinational insurance company. Theinterviewee is part of the enterprise operations group that provides
support services to both the personal and commercial insurance divisions.
“As you can imagine, our industry is document
intensive. When customers make a claim against
their insurance policy, we receive emails, faxes,
and mail. Customers send us receipts from theinitial purchase and images of the damage. We
receive around 50-70 thousand documents a
day through our inbound channels, and all these
documents need to be processed. Typically, thisinvolves opening a file, classifying documents
received against a claim, and then routing themto the appropriate department. There are also
the documents produced by the claims adjuster
as they evaluate the claim against the policy
coverage and communicate a decision and/or payment. These are outbound or customer
communications.

a document repository for controlling,
securing and retaining documents, and asolution for managing all outbound customer
communications related to claims and policies.
Let me elaborate on how digital technology
transformed each area.
Our digital mailroom solution is based on
digitalizing all inbound correspondence.
Information is captured and extracted using
advanced recognition technology. Metadata
is assigned so the document can be autoclassified against a policy and support straight
through processing (STP) for the necessary
workflows. The system ascertains which claim
the metadata relates to and triggers a workflowthat routes directly to the claims consultant
working on that claim—it doesn’t go into a big
pick list, it actually goes to the exact person
specified. So efficiency is a function of both
our claims system and the metadata drivingthat process.

When I started with the organization four
years ago, the claims management process had
some digitalization, but it was largely paperbased. This translated into long handling times
and poor service for our customers. We knew
intuitively that digitalization would help us
improve the customer outcome, so we launcheda claims transformation program to digitalize
our claims management process, reduce thecomplexity of our operations, and ultimately,
improve our service levels.

Before the document is made available tovarious workflows, however, it’s important tostore it as a record in a repository as quickly as
possible. Supporting the digital mailroom, we
implemented a records management solution
to ensure every document would be archived,
controlled, policies applied, and only then would
it be released to workflow systems for fast andcontrolled access. Our document repository
ensures we have a single source of the truth for
all processes to reference.

My contribution to this program was to oversee
the solution architecture underpinning three
key areas of our claims management process.
This involved implementing a digital mailroom
solution to handle our inbound correspondence,
43

TRANSFORMATION IN ACTION

At the other end of the processes, we had a lotof outbound correspondence related to claims
and policies that we brought into a customer
communications management solution (email,fax, external print, SMS). Correspondence
had to be integrated to create a complete
file about the claim. Merging informationfrom these two worlds gives claims adjusters
access to everything about the claim, beyond
information in the claims management or policy
management systems. Now they have complete
information about the claim and can makebetter decisions in faster timeframes.

expose to users only the document types andsub-types we want, and we can demonstrate
via audit trail who actually looked at them.
This is especially important for our workers’
compensation claims, which contain personal
data that is quite sensitive. So the permissions
and audit trail capability is vital.
Today, not only can we archive and retain
documents within our organization, but we candispose of documents in a defensible fashion
as opposed to keeping them forever. Defensible
deletion is really important, and to do this,metadata has been vital. Our different linesof business have very different rules as do thecountries in which they operate. In Australia,
for example, documents must be kept from five
to seven years, but requirements for retention
can range up to 90 years. So documentclassification is key for helping us track what weare retaining and for how long. As soon as we
scan an inbound document, we immediately
apply policies to them before they are used by
the workflow. This is done right up front.

Today, the claims management process isfully automated, and this automation has
reduced manual keying and paper handlingand improved data quality. It brings together
structured data in our back-end systems with
unstructured data from inbound and outboundcorrespondence, merging everything into asingular file. The claims transformation program
has improved the customer outcome—we’veseen our claims processing times reduced
from days down to minutes, which is a drastic
improvement and exactly the outcome wewere seeking.

As we move forward into the future, we need tocontinue responding to new digital technologies
as they become available. The benefits ofdigitalization became evident to everyone assoon as we started this program. When wegot a sense of the aggregate volumes and theimpact of the system on our business results,
we realized it was the right thing to do. It was
strategic. It was this initial realization that drove
us and continues to drive us forward.”

By modernizing our claims process we were able
to do more with the same number of people
and redeploy staff to customer-centric roles.
In one part of the business we actually had 40
people simply filing paper, and in that particular
example, we were able to reorganize them—tohelp us process more claims and perform policy
administration. With the new system, we are
no longer creating physical records. While wecurrently have in the order of 500,000 boxesof physical records to manage, we’ve turned
off the physical records tap. Moving forward,
everything will be digital.
The new claims process has also reduced ourcompliance risk through better tracking of
document-related activities. The solution gives
us increased ability to secure and audit accessto all correspondence. We can selectively

44

DIGITAL BUSINESSA Platform for Transformation
Information lies at the heart of digital transformation. But how can organizations unlock
the transformational potential of information without compromising productivity
and security? EIM is the key transformational technology. Throughout the phases ofdigital transformation, a digital enterprise can adopt EIM as its foundational enterpriseplatform for change.
An EIM framework enables FIs to: Digitalize all information assets and processes Build applications that drive the top-line results, such as revenue, customer

satisfaction, innovation, and growth Integrate structured and unstructured data into a single source of the truth
 Facilitate social collaboration to foster engagement, idea sharing, and innovation
 Mobilize information and processes across any device, without compromising

security Deliver a proven framework for information governance across all functions andapplications
 Consolidate IT platforms and applications to manage information flows
 Protect the enterprise with robust, multi-layered security
 Capitalize on opportunity and expand into global markets

Becoming a digital enterprise necessitates using digital technology to better satisfy
digital consumers and engage with business partners. Digital financial services combines
exceptional customer experiences with efficient processes and operating models—both
enabled by digitalization and the underlying technologies, processes, and structures.18
At the front end, efficient FIs will deliver high-quality customer interactions andtransactions, securely and in real time. Digital consumers will demand transparency
into pricing and immediate gratification. Products will be offered at competitive
prices to consumers who are better informed and understood. For this to happen, theback end will rely on digital technologies that allow for fast and efficient processing.
Digitalization helps FIs improve efficiencies and increase revenues using leaner
operating models, streamlined decision-making, consolidated unstructured information,and seamless information and process flows. Digital governance is a fundamental aspectof digitalization, ensuring that operations comply with internal policies and external
regulation—all along the financial supply chain. An integrated infrastructure based on adigital business strategy helps digital FIs meet these requirements.
18

 tefan Marcu et al, “Banking in a Digital World,” AT Kearney Digital Business, 2013, http://www.atkearney.com/digitalSbusiness/ideas-insights/article/-/asset_publisher/dWxykCQaJmh5/content/banking-in-a-digital-world/10192 (accessed May2015).
45

CHAPTER 2

Customer
Journey

Improveddecisionmaking basedon analytics
and EIM

Corporate
Control

Enhancedconnectivity
with colleagues,
customers, andacross thebusiness
network

Product
Development &Innovation

DigitalEngagement

Risk
Management

Increased
efﬁciency
throughautomation ofprocesses

Empowerment
and innovation
through new
products, services,and business models

Sales &
Marketing

Digital Supply
Chain

FIGURE 2.10: A Digital Financial Institution19

A Digital Business Strategy
In broad terms, digital business is billions of people, businesses, and devices
communicating, collaborating, and transacting, all gaining further efficiencies throughthe smarter use of technological advances. Its potential is huge—from replacing paper
and manual processes with software to moving applications to the Cloud to lower costsof ownership and increase agility, to applying analytics to deepen engagement withcustomers. But it involves more than adopting an e-commerce model: it shakes businessat its very core. It moves beyond digitalizing every process to challenging old operational
approaches and inventing new processes.

19 tefan Marcu et al, “Banking in a Digital World,” AT Kearney Digital Business, 2013, http://www.atkearney.com/digitalSbusiness/ideas-insights/article/-/asset_publisher/dWxykCQaJmh5/content/banking-in-a-digital-world/10192 (accessed May2015).

46

DIGITAL BUSINESS

Digital business upsets the status quo and operates using a flatter, socially-enabledbusiness model. It promotes direct engagement between suppliers and consumers.
What is required is a radical break from the past and the creation of entirely new
business models with new expectations and new ways of working. Customers are
already embracing digital technology and redirecting the value chain. Millennials areentering the workplace and bringing new expectations for how they want to work. Value
chains are being transformed based on new business models and processes that are
flexible and scalable and better able to serve the customer.
FIs will only be able to capitalize on this promise of opportunity and innovation if theirfocus remains fixed on the customer and finding the balance between marketing andoperations. A digital business creates new revenue streams using digital resources. In
order to digitally transform, FIs will need to develop a digital strategy to evolve theiroperations. The strategy should support a digital workforce, infrastructure, operations,and engagement across the entire extended enterprise ecosystem.
Digital disruption will help reform the enterprise into a digital business. However, totruly transform, organizations will need to govern and secure their information. As
recent history has shown, information is the byproduct of digital disruption—and there
is a lot of it. In the future, everyone will participate in the new information economy astechnology becomes more accessible and information becomes the primary means tovalue-added production. Underlying the development of a digital strategy then must be
an effective way to manage information to promote innovation and opportunity, while
minimizing risk. This is discussed in the next chapter, “Information and Process Flows”.

47

C H A P T E R

3

INFORMATION AND PROCESS FLOWSCHAPTER 3

C HAPTER 3

Information and Process Flows“We don’t have better algorithms. We just have more data.” – Peter Norvig, Director of
Research at Google1
Disruptive innovations in technology are challenging the established rules of business.
What all these technologies have in common is that they enable a new way of using
information. For Financial Institutions (FIs), information is no longer just a cost factor
but the basis for increasing growth and competitiveness.
Financial services is a data-driven business powered by data-driven insights. Fromtransactions to customer interactions to risk assessments and investment portfolios,
FIs collect massive amounts of information, and this data is used to increase revenue,
improve efficiencies, and comply with regulations. The ability to access the rightinformation, identify prospective customers and markets, and respond to risks in realtime empowers organizations in the financial industry to make strategic decisions thatboth grow and protect the business.
Visionary FIs are the businesses that can effectively leverage the great wealth of
information that flows throughout connected society today. While technology leadersof the past were preoccupied with managing technology systems, today’s leaders focus
on the strategic value of content. In the digital world, information is the new currency.
One of the biggest business challenges related to digital transformation will be how
to effectively manage growing volumes of information to optimize its value while
reducing risk. How can FIs unlock the potential of information without compromisingproductivity and security—especially when security is mandated by law to protect
individuals, corporations, and even nations? This chapter examines this question in detailand positions Enterprise Information Management (EIM) as the key transformational
technology of the digital age.

1

T im O’Reilly, “Why Google Is Offering 411 Service,” O’Reilly Radar, April 2007, http://radar.oreilly.com/2007/04/why-googleis-offering-411-ser.html (accessed April 2015).

50

INFORMATION AND PROCESS FLOWSHow Much Data?
Over the last decade, the rate of information growth has increased exponentially. By
2020, the world will generate 50 times the amount of information it currently does in 75
times the number of "information containers", while the resources needed to manage
it will grow fewer than 1.5 times. 2 As more people, processes, and data interact, an
information economy is emerging and the value of information is increasing. Its rapid
growth is already outpacing the skills required to store and manage it. And this challenge
is being compounded across all industries.
The Digital Universe: 50-fold growth from the beginning of 2010 to 2020
40,000PROJECTED

Exabytes

30,00020,00010,000

0
2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

FIGURE 3.1: Growth of Information by Exabytes

2019

2020

3

Today there is more data in more formats being exchanged at faster rates than everbefore. Mobile phones, online shopping, social networks, electronic communication,
GPS, and sensors all produce massive streams of data. More data is shared across theInternet every second than was stored in the entire Internet 20 years ago. People are
increasingly transacting and interacting online. Google ® processes 20,000 terabytes(roughly 20 million gigabytes) of information a day. Video content is added to YouTube ®
at the rate of 300 videos per minute.4 To put this amount of data in perspective, by
current estimates it would take longer than 1,000 years to watch all of this content
in linear time. Retailer giant Walmart collects 2.5 petabytes (or 2,500 terabytes/2.5
million gigabytes) of data every hour based on customer transactions alone. 52

T im O’Reilly, “Why Google Is Offering 411 Service,” O’Reilly Radar, April 2007, http://radar.oreilly.com/2007/04/why-googleis-offering-411-ser.html (accessed April 2015).

3

John Gantz and David Reinsel, “The Digital Universe in 2020: Big Data, Bigger Digital Shadows, and Biggest Growth in the Far
East,” IDC, December 2012.

4

YouTube Statistics: https://www.youtube.com/yt/press/statistics.html (accessed July 2015).

5

A ndrew McAfee and Erik Brynjolfsson, “Big Data: The Management Revolution,” Harvard Business Review, October, 2012,https://hbr.org/2012/10/big-data-the-management-revolution/ar (accessed April 2015).

51

CHAPTER 3

In the financial industry, transaction volumes are growing at an astronomical rate
due to the ease, convenience, and availability of digital transactions. Transactions areproliferating based on our reliance on mobile devices. Mobile payments are expected
to reach 47 billion global transactions this year. 6 Consumers can access their accounts,transfer funds, and make trades from any location, at any time, on any device. This
increase in digital activity has led to increases in transactional volumes both online andon mobile phones, as illustrated in Figure 3.2.
Number of Global E-Commerce and M-Payment Transactions (Billion), 2011-2015
E-Commerce Transactions (Billion)
2014 Industry Estimates
2011-2015F CAGR
Total

21.3

15.9%

25.4
29.3
34.1
38.5

Mobile Transactions (Billion)

2013

0.6
6.4
7.0
1.1
10.0
11.1
2.2
15.8
18.0

2014

25.4

2011
2012

2015

2014 Industry Estimates
2011-2015F CAGR
60.8%
Total
Non-banks 82.7%
58.1%
Banks

3.8 29.2
39.9

7.0

47.0

FIGURE 3.2: Global Online and Mobile Transactions Are Growing 7

As transaction volumes grow, so does the need to store and access this information.
The regulatory environment in which FIs operate requires them to maintain many yearsof transactional data for specified periods of time. On average, a North American bankcaptures over two billion internal transactions per month, in addition to public datafrom over one billion external transactions. 8 In capital markets, the pervasiveness ofelectronic trading has meant that firms both generate and act upon millions of marketrelated messages and transactions every day. Likewise, insurance companies are required
to manage massive amounts of claims-related data. This can equate to thousands ofpetabytes in data. Processing these increasingly large volumes of information has
become a challenge for many financial institutions.
As volumes of information grow, disruptive technologies are introducing new formats of
information that must also be managed: data from derivative trading platforms, social
media, blogs from Internet channels, transaction history data sets, emails, GPS datafrom smartphone applications, and more. On a continual basis (microseconds in highfrequency trading), FIs are required to exchange, store, and analyze their information—from entire transaction histories to micro data points. Advances in technology areenabling FIs to combine large pools of structured and unstructured information for
greater insights into performance, markets, and consumers.
6

“ World Payments Report 2014,” Capgemini and RBS, 2014.

7

Ibid.

8

Stefan Dab et al, “Global Payments 2014: Capturing the Next Level of Value,” Boston Consulting Group, September 2014.
52

INFORMATION AND PROCESS FLOWSStructured and Unstructured Information
In the digital world, FIs will need to deliver business insights in context, on demand,and at the point of interaction by analyzing every piece of available data, including
structured and unstructured information.
Structured information is data in fixed fields in a relational database that is housed inEnterprise Resource Management (ERP) systems. ERP tools share a common data model,
covering operational end-to-end processes, such as those found in finance, humanresources, distribution, manufacturing services, and a supply chain. These processes
depend on large volumes of data. Unstructured information is the conversation that
forms around this data.
Of the volumes that FIs amass and store, analysts predict somewhere between 80 and
90 percent of their information is unstructured. Unstructured data within an FI might beclaims data, customer call records, texts, videos, emails, and other documents. Content
from external sources includes Facebook posts, videos, and tweets.
Integrating structured and unstructured information across silos is a common challengethat hampers access and productivity in any organization. The volume of content
is impacted by the departments it must flow through. In many FIs, information is
maintained in siloed repositories. This means that information that should flow securely
and effortlessly across departments, partners, and customers—both on-premises and in
the Cloud—is disconnected and processes are fragmented. As a result, FIs do not havea consolidated view of their information, which means they do not have a consolidated
view of their resources, projects, or customers.

... Each department has its own information silos and flows
Human Resources Accounting

Marketing

OfficeLegal

Call Center

ERP

FIGURE 3.3: Integrating Information Across Silos is a Common Challenge53CHAPTER 3

Information chaos reduces margin. Data is expensive due to storage costs and theresources required to manage it. Mismanaged information can cost FIs millions ofdollars in expenses associated with litigation, regulatory compliance, and e-Discovery.
Data fragmentation diminishes the value an enterprise can derive from its information
flows. Most organizations struggle with siloed information and connecting processes
across the enterprise. Often, the enterprise must overcome technical, organizational,
and cultural hurdles to manage information as an asset.

Big Financial Data = Big Financial Headaches
The volume of enterprise information continues to create big headaches for CIOs andIT leaders—from management to infrastructure, storage, resourcing, and security.
Current technologies and architectures are not equipped to handle massive amounts of
information. As their “digital shadow” increases, consumers are wary of multinationals
and governments using their data to serve their own agendas. Security and privacy areimportant issues associated with information. To cope in the digital world, FIs will needto rethink their data management infrastructure, especially since information will becore to implementing a digitalization strategy. Organizations will need to invest in EIM
solutions and acquire the skills needed to maximize the value of their information.

Technical: The Technology Gap
The right resources have to be in place to analyze information effectively. For many FIs,
their data accumulates too quickly, outpacing the ability to use it to their advantage. To
meet the demands of growing amounts of data, FIs must have processing and storage
requirements in place, and the size and scale of these systems makes them costly to
manage and resource.
Too many silos—data is not pooled for the benefit of entire organization
57%
Time taken to analyze large data sets
44%

40%
Big data is not viewed strategically by senior management
34%
Unstructured content in big data is too difficult to interpret
33%
High cost of storing and analyzing large data sets
24%
Big data sets are too complex to collect and store
17%

Source: Caphemini® April 2014 The Financial Brand

Shortage of skilled people for data analytics

FIGURE 3.4: Impediments to Effective Information Management at Banks54

INFORMATION AND PROCESS FLOWS

Cloud computing offers affordable solutions for storage. It also allows for analysis
on large data sets which could not previously be accessed. While CIOs are focusedon minimizing the cost of storage, backups, and security, cloud computing offers
convenience, flexibility, and scalability.
In order to benefit from their information, FIs will need to ascertain the value of theirinformation, how much they can store, how much storage costs, and for how long theyneed to retain the information. Deploying EIM technologies to capture, manage, protect,and even dispose of data is a good first step. Data must be discoverable, accessible, andusable for it to have value. It is important to manage this data according to regulations
and corporate policies and procedures—ensuring that analysis and release of informationis legal and compliant.

Organizational: The Skills Gap
The right people with the right skill set must be put into place to own and manage
information initiatives across organizations. Due to its diversity, people with a variety ofskill sets are needed to manage information. New information-related roles are alreadyemerging and will dictate requirements for a new IT structure to support roles related
to information leadership, innovation, and strategy.
There is already a skills gap in expertise required to collect, mine, and analyze big
data. To capitalize on their information, FIs will need to adopt technology enablers andcreate strategies—as well as applications—around information. Culture will shift to
one that engenders open knowledge sharing and relegates menial tasks to automatedprocesses. Competition will be based on the ability to analyze information for insightand customer information. The better the information, the faster and more precisely FIs
can meet consumer needs. To do so effectively, they will need to find a balance between
the opportunities provided by information and the risks it presents in both privacy
and security.

Cultural: No Risk, No Reward
Despite the potential benefits that greater amounts of data brings to society, there
are growing concerns around security and privacy. FIs are already the gatekeepers ofprivate information and as organizations, they are susceptible to information leaks,
which raises the question—how much control do we actually have over our own personal
information? How will government and regulators be able to monitor and protect hugeamounts of personal data stored in the Cloud?

55CHAPTER 3Your digital shadow is the sum of alldata left by your interactions in adigital environment. As we rely moreon technology, these digital
shadows will only grow

FIGURE 3.5: Growing Digital Shadows

People are suspicious about the ways organizations make use of their personal
information. As consumers, we move through our days leaving data traces—fromtime spent on Facebook to purchases we make both off and online, texts sent, video
surveillance footage, and even the energy consumed in our house. These data traces
make up an individual’s digital shadow. As we become increasingly reliant on technology,
and this technology becomes more interconnected, digital shadows will only grow to
become rich, varied, and abundant.
To capitalize on digital shadows, businesses will need to find ways to build trust andreward consumers in exchange for their data. FIs will need to become more sophisticatedin their use of personal data. In the digital world, all individuals will have a commercial
identity based on their own personal information. FIs will be required to protect theseidentities by investing in robust information security. The number of cyberattacks
on organizations is already impacting spending on information security with annual
worldwide investment ranging between $375 billion and $575 billion.9 Enterprise
Information Management strategies and technologies can be used to unlock the valueof information without compromising security and privacy.
In the following interview, Aon Affinity Insurance Services is digitalizing its products andservices, adopting technologies like big data analytics to gain value from its customer
information and improve service delivery.

9“ Cybersecurity: combatting the next generation of cybercrime.” Fidelity, October 2014,
https://www.fidelityworldwideinvestment.com/norway/professional/investment-forum/details.page?id=/templatedata/
perspectives/article/data/cybersecurity-combatting (accessed April 2015).

56

TRANSFORMATION IN ACTION

Aon Affinity
Insurance Services
Aon is the leading global provider of risk management, insurance andreinsurance brokerage, and human resources solutions and outsourcing
services. Through its more than 66,000 colleagues worldwide,
Aon unites to empower results for clients in over 120 countries via
innovative and effective risk and people solutions and through industryleading global resources and technical expertise. Aon has been named
repeatedly as the world’s best broker, best insurance intermediary, best
reinsurance intermediary, best captives manager, and best employee
benefits consulting firm by multiple industry sources.

FIGURE 3.6: Aon Affinity Insurance Services

What follows is an excerpt from an interview with Brahm Om Sharma, Senior Director of IT
and Head of information Systems, American Institute of Certified Public Accountants (AICPA)
Insurance Trust at Aon Affinity Insurance Services and Adam Howatson, Chief Marketing Officer
at OpenText.

57

TRANSFORMATION IN ACTIONADAM HOWATSON : Can you please briefly
tell us about the services Aon provides
to its clients and the role you play indelivering them?

to capture these digitally. There are manyactions that involve exceptions or requests from
CPAs, including qualifying for a different rate,
a reduced premium, or a cancelled policy—allof which require a refund. As custodians of the
AICPA accounts, we have to be careful andensure that we process these refunds accurately.
The old approach involved making a paperbased request, which would then be reviewed
for approval. Customer Sales Representatives(CSRs) would be required to physically seek out
the appropriate approvers and their signatures.
After these were obtained, a “check request”
would be created. With the new system, thisprocess would be completely automated, all but
eliminating paper “floating” around the office, insearch of signatures for approval.

BRAHM OM SHARMA: Aon is the world’s largest

risk management firm and we have a fairly
diverse portfolio across many business units.
We provide many different types of services toour clients. I manage IT for the AICPA Insurance
Trust, so my role is similar to a division CIOlevel role. The Trust operates like an insurancecompany, offering Certified Public Accountants(CPAs) professional liability, term life, disability,
and long-term care insurance products that are
not available to the general public.
What are your plans for digitalizingthese services?

Part of this process is digitalized, with the reston target to go live this fall. Once the system
is fully in place, when a request for a refund
comes in, it will be automatically generated
as an open process request. A task will becreated and routed automatically througheach step in the process. Once complete, itwill move to accounting, who submits therequest to the bank, and the bank will handle
the refund from there. Once the system is fully
implemented, this will all take place without
any paper, and without requiring CSRs to write
down a name or a policy number—this will be
captured automatically. The entire processused to take about three weeks to complete,
so our customers would have to wait that longfor a refund. Once it is fully automated, ourclients will have their refund sitting in theirbank account within about two days. So as
well as improving our accuracy and efficiency,
digitalizing application processes will improveoverall customer experience and satisfaction
with our services.

Up until six years ago, our transactions andinteractions were predominantly paper-based.
This met the needs our existing insured base,a demographic that is somewhat tech savvy
and roughly between 50-65 years of age.
We realized that to drive future growth andappeal to a younger and more tech-savvy
CPA demographic, we would need to digitalize
our products and services and make themavailable online via a portal. Our goal is to
be one hundred percent digital and EIM isproviding foundational technologies to help us
accomplish this.
Does this goal extend strategically to all
operations of Aon business, both throughexternal channels to customers andinternal processes, such as the way theemployee files are managed, or any sort ofback-office processes?

In 2014 we started implementing a project toautomate, or digitalize our incoming application
processes. We wanted to replace our manual,
data-entry step in the application process andreduce a reliance on paper. The system had
to be flexible enough to allow for paper-based
application documents and give us the option

That's an incredible transformation. We
hear a lot of about cybersecurity and about
the way personal data is handled. How docybersecurity, privacy, and compliancewith regulations affect the58

TRANSFORMATION IN ACTION

way that you make decisions around yourdigital strategy?

analytics, which relies on information gleaned
from structured and unstructured data. We
use predictive analytics to gain insights based
Our clients—the AICPA—are the people
on customer behavior on our website or our
who write the rules for audit. They create
portal. We know who is using the site and whatregulations for compliance. This puts pressure
they’re using it for. And we can combine thison us to be ahead of the game when it comes
information with other customer interactions,
to compliance. We get audited by an AICPAappointed auditor every year. They conduct two such as telephone calls with our CSRs. These
insights can identify which customers have aseparate audits: one is a Service Organization
propensity to buy a specific product or service
Control 3 (SOC 3), which relates to a service
providing us with opportunities to cross-sell andorganization’s internal controls for security,
availability, processing integrity, confidentiality, upsell. By analyzing our information we canmake sure we’re delivering more targeted offers
or privacy. The other is the regular operationaland meeting our customer needs. Our goal is toaudit and it includes a focus on security. Our
processes are strict around information security. provide services for our customers to protect
We handle HIPAA (Health Insurance Portability them against risk, not just to sell products, so wehave their best interest at heart. Our intent isand Accountability Act)-related information
to cover our clients so that in the instance thatas part of the underwriting process. Whensomething happens, we can protect them andclients submit applications for life or disability
return their circumstances to normal as soon
insurance, they submit medical information.
as possible.
Generally, whenever a claim is filed, personal
information is shared, so whether it’s HIPAA
Millennials are entering the workforce andor the PII (Personally Identifiable Information),
becoming a key purchasing demographic.
we have to make sure our processes andDo you have a specific digital strategy
information are secure and compliant. We’reoverzealous about the protection of information in place for attracting the Millennials, interms of the tools that you provide yourand security. We use SSL (Secure Socket Layer)
employees as well as the services you
or SSDP (Simple Service Discovery Protocol)
provide your clients?
to encrypt and protect information like a social
We have a three-pronged approach to thissecurity number, where it is stored, and when
aspect of our digital strategy. First of all, we’re
it is exchanged. Public/private tokens help add
creating a digital workplace environment thatan extra layer of security. So data extraction
is conducive to Millennials. In fact, Aon has
is always secure and encrypted whenever it isa specialized department called Workplace
stored and transmitted.
Productivity that has high visibility withexecutives like the CIO. This initiative is focused
Obviously, you collect a lot of customer
on creating the best productivity technology
information. Do you leverage big data
tools available for our employees. Secondly, weto better understand your customers
have developed a strategy that is completely
and help you optimize your products,
your marketing approach, and yourfocused on optimizing channels and ways toclient interactions?
connect with Millennials or Generation Z.
As part of this strategy, we understand that
For my business unit we are creating a strategy
they have very different needs than older
for our Customer Relationship Management(CRM) initiative to provide us with a 360-degree demographics, which means that the traditional
products and services we’ve been offering mightview of the customer. It involves data
not be the products or services they’re looking
management and advanced
59

TRANSFORMATION IN ACTION

for. As a result, we’re continuously innovating
to develop new products that will meet thisgeneration’s needs. So we have a strategy toattract and retain younger generations in theworkforce within Aon, and we have a strategy
to attract and retain the same demographic
as customers. Finally, we’re creating uniqueand targeted products to meet the needsof Millennials.
Very insightful, thank you for yourtime Brahm.

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INFORMATION AND PROCESS FLOWS

Where’s the Value?
So how does the enterprise find value—and find it quickly—in the mass of unstructured
and unmanaged information? The solution to this problem lies partially in its root
cause. The network effect, both inside and outside the firewall, has empowered FIs tocollect data at a high velocity across many channels. Based on this data, context canbe determined, and this is where value is created. FIs can take advantage of locationor presence to tailor offerings or information to match individual preferences orproximity—on either side of the firewall.
Technologies that enable businesses to integrate unstructured content with structured
data present an enormous opportunity for improving business insight for financial
institutions. An insurance claim form provides a good example. While much of the mostcritical information is captured in text format, the ability to combine this text withstructured data in a claims database can help the insurance company to deliver better
customer service and enhance their ability to detect fraud and comply with Know Your
Customer (KYC) regulations. Banks can use analytics tools and information management
to build profiles for customers and improve segmentation; deliver more personalized
campaigns, products, and services; and provide better service based on informationthat is integrated across channels.

FIGURE 3.7: Analyzing Banking Spend

61

CHAPTER 3

Deeper connections allow for instant action to be taken, transactions to occur, andexperiences to be created. Technologies such as mobile apps and self-service kiosks
are helping FIs tap into the digital lifestyle of both their workforce and consumers.
Digital exchanges are immediate. Services such as a trade ordering are becoming acommodity and competitive advantage requires processing more trades at a faster rate.
In the future, FIs will have much tighter connections of each node in a complex series ofboth internal and external applications. All of this will depend on information and thetechnology that conveys, stores, manages, and analyzes it.
FIs of the future will be part of an information ecosystem in which data can be sharedacross the whole value chain, flowing from employees to partners (both finanical andnon-financial) to customers. Sophisticated analytics help FIs analyze their vast storesof data quickly and more easily to predict and respond to changing business needs.
Business intelligence, sentiment analysis, social media analytics, content analytics,
and predictive analysis can be applied to a complex mix of data to enable FIs to act on
events and information without human intervention. There will be an upsurge in thedevelopment of agent-oriented processes, requiring machines to act as agents and makedecisions based on artificial intelligence.
In the digital world, FIs will strive to consolidate information across silos and connect
front-office innovation with back-office operations. Dashboards and visualization tools
will drive deeper engagement and insight. Users will interact with the ecosystem basedon their own preferences and data. Processes will be integrated and allow for massive
scales of B2B commerce and exchange, with analytics applied to optimize performance.

Information Management and Analytics
To stay ahead of their competition, leading FIs strive to find new ways to discoverinsights into their customers and markets. The effective management of unstructured
information and the application of analytics create competitive advantage in the financial
industry. FIs have amassed huge volumes of information based on years of performancedata related to sales, products, services, and customers. Mining this information for
insights gives them greater ability to segment their markets, assess risk, understandtheir customers, and make more informed and timely decisions.
While the industry has always been data-centric, FIs are combining data from inside andoutside their organizations for greater insight. Advanced analytics and data models canprovide insightful analysis on a diverse range of structured and unstructured data sets.
Parallel processing and algorithms allow for the fast identification of useful data andreal-time updates. The benefits analytics can bring are myriad and include improved
customer revenue and loyalty, increased transparency and risk management, enhanced
performance, and greater innovation to create new growth markets.

62

INFORMATION AND PROCESS FLOWS

Increased Customer Revenue and Loyalty
Up until a decade ago, organizations had the privilege of intervening and explaining thevalue of their products and services to customers. FIs no longer own the relationships
with their customers. Instead, the consumer is in the driver’s seat, often seeking
relationships with multiple firms to serve a range of needs, from holding savings
accounts and mortgages to home and life insurance, investments, and retirementsavings. Digital consumers are fickle: they use numerous channels to interact with
their financial institutions of choice. As described in Chapter 1, disintermediation has
bifurcated the industry. In a volatile and competitive market that is further complicatedby convergence and consolidation, it is a constant challenge to obtain a 360-degree viewof the customer. Since the number one goal for FIs is customer acquisition, delivering an
exceptional digital experience is a key differentiator.
Analyzing customer information in new ways reveals relevant topics, summaries,
sentiments, and relationships to deliver more enriched information. Buying trends
and patterns can be revealed by monitoring system information. Insight into customer
personas, behavior, and pathways gives organizations the ability to deepen customer
engagement, exceed expectations, and create a lifetime of customer value. Customers
benefit from self-service access to their own account data and history and are provided
with recommendations and information about additional products and services. Froman asset and wealth management perspective, customers can be given a complete
picture of their finances based on accurate, detailed reporting, allowing them to budget
and save to improve their quality of life.
In the following feature, NASCO is using analytics to power an improved claimsreporting system for greater insight, efficiency, and customer satisfaction.

Improved Information Risk Management
When multiple data sources are integrated, correlated, and analyzed, patterns oranomalies can be revealed to help identify instances of fraud. By examining data acrossvarious sources, FIs can uncover fraudulent or potentially fraudulent activity such as
money laundering, mortgage fraud, insider trading, tax fraud, and procurement fraud.
Analytics helps banks and insurance companies scrutinize interactions across channels
to reduce losses from collection recovery and claims processing, for example. Oncepatterns are revealed, programs can be tailored to effectively recover unpaid fees andoutstanding loans to reduce losses. All of these scenarios require capturing data in realtime, analyzing it, and taking the appropriate action.

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I N N O VAT O R S T O R Y

NASCO“Through the flexibility ofthe solution, we are able todeliver enterprise, web-based
customer information via asingle BI infrastructure, ensuringconsistency while lowering our BI
deployment costs.”
AMANDEEP SINGH, TECHNICAL CONSULTANT,NASCOFIGURE 3.8: Interactive NASCO Reporting Dashboard

NASCO provides the most efficient single-system claims processing solution for national,
state, large group, small group, individual, and government business, processing over 280
million claims for over 20 million members. NASCO’s system is unsurpassed in the market
for dependability, flexibility, scalability, and operational performance. NASCO also offers ahighly configurable membership solution as well as performance-based services designed
to help customers improve their operational efficiencies and reduce costs.
NASCO’s existing systems were not flexible enough to meet their customers’ business andoperational reporting needs. The Company was hampered by long development cycles,
text-based reports, and a lack of timely and cost-effective ways to generate reports. As
a result, many customers were not using NASCO’s premium billing services and overallcustomer satisfaction was declining. Looking to remove complexity and create a seamless,engaging customer experience, NASCO turned to a cost-efficient, web-based BusinessIntelligence (BI) solution flexible enough to integrate with existing applications, generate
customizable reports, and scale to support a growing customer base.
The new solution’s collaborative environment enables developers, report writers, and end
users to work together to create rich, interactive membership and billing applications. Thishas decreased the time required to deliver new reports and has enabled NASCO to lower
its development costs. Timely delivery of enhancement requests has had a positive impact
on customer satisfaction. End users can easily access billing and member data online andcreate customized reports on demand. Since its implementation, NASCO has expanded
the solution from a small deployment to an extranet application with a large user baseand over 300 custom reports. The cost savings and request turnaround times achieved
have been unprecedented. Due to the successful implementation and measurable valueadd, NASCO is looking to expand the solution and continue to leverage its rich interactive
reporting capabilities.
64

INFORMATION AND PROCESS FLOWS

Fraud in financial services is driven predominantly by incidents of cybercrime and money
laundering. One in three of all organizations in a recent survey have been victimized byeconomic crime. The three sectors that are most heavily targeted are financial services,
retail, and communications. One quarter of respondents to the survey had experienced
money laundering during the survey period.10 FIs consider money laundering to be agreater risk than corruption, bribery, or competition law. They are required by law toreport all instances of money laundering. This requires the diligent review and reportingof customer transactions in compliance with regulations.
On the capital markets side, regulatory efforts are focused on getting a moreaccurate view of risk exposures across assets, lines-of-business, and firms in order tobetter predict and manage the relationships between systems. Many firms are using
information management and analytics to monitor their information risk controls in realtime. Combining and accessing information across systems helps to give FIs a holistic
view of risk, empowering them to adjust their performance accordingly.
Financial Reporting and Analysis

45.1%
38.3%

Risk Management
New Customer Acquisition

35.8%

Cost Control or Reduction

35.6%
29.6%

Regulatory Compliance Requirements

28.9%Internal Reporting and Information Sharing

23.8%

Customer Retention and Service
Product or Service Innovation

23.6%

Workforce Optimization

18.6%

Optimization of Operations

18.4%

Other

2.2%

FIGURE 3.9: Risk Management as Key Driver for Analytics11

Displaying user-trading activity is another regulatory requirement. Using analytics,
firms can capture daily transaction activities for both customers and brokers, helping
them to engage in higher value interactions. Data from multiple sources such as current,
historical, and stock price data can be integrated and accessed. Customers are able todrill down to underlying transactional data for analysis. All of this information can beretained for regulatory scrutiny.

10“ Economic crime: A Threat to Business Globally,” PwC’s 2014 Global Economic Crime Survey, PWC, 2014.

11“ IDC Financial Insights: Analytics in Financial Services,” IDC, June 25, 2013, http://www.slideshare.net/TIBCOSpotfire/idc23472358 (accessed July 2015).

65

CHAPTER 3

For enterprise risk management, the added challenge is data integration acrossdisparate systems. The need for security has never been more pressing with information
fragmented across mobile devices and multiple applications, in both private and public
clouds. In all sectors, the ever-present threat of security breaches is driving investments
in secure information management. Data consolidation across networks with security
mechanisms built right into the system, along with secure information exchange andgovernance technologies, work together to protect information and identify suspicious
patterns that require immediate action. This is discussed in more detail in Chapter 6,“Digital Governance”.

Enhanced Performance and Collaboration
Making information available and searchable frees up valuable time so resources
can be allocated to focus on top priorities. When information is combined acrossdepartmental systems and processes, data is easier to access and duplicated efforts(and data) are reduced—saving time and money. Automated solutions eliminate theneed for business users to sort and classify growing amounts content. With a holistic
and consolidated information system, information can be analyzed to identify costsavings and opportunities to increase overall productivity. There are opportunities tolook for patterns for compliance purposes and to identify patterns of collaboration thatare effective. In the digital world, this is where organizations will invest to optimize
efficiency and performance.
Analytics use-cases range from departmental reporting to large scale, customerfacing applications. When analytics are embedded, information can be used to support
the decision-making process at each step in a business process. Data sets can be
combined into management dashboards and comparative engines used to measure theeffectiveness of projects, compare performance across business functions, and track
outcomes over time. Variability in performance can be revealed. FIs can add value toinformation by continually measuring impact and allocating resources, identifying bestpractices, and refining campaigns. As a result, insight can fuel continual performance
improvements, learning, and growth across the entire enterprise ecosystem.

Creating New Revenue Streams for Growth
FIs are looking for new methods and techniques to develop new products and trading
strategies. Developing and launching innovative products is a key business strategy
for wealth management firms, payment companies, credit card companies, and banks.
Additionally, insurance companies need to grow their market share by tailoring insurance
policies for each customer and can do so using fine-tuned analytics.
Current technology does not support product innovation that relies on information
outside of traditional channels and systems of record. Disruptive innovations are often
based on emerging systems of engagement, such as social media and video sharing sites.

66

INFORMATION AND PROCESS FLOWS

The challenge has become how to manage, store, and analyze this amount of data in an
efficient and cost-effective way to better manage portfolios.
As information is managed as a corporate asset, the pressure to measure and maximize
its value will increase accordingly. FIs will discover additional opportunities to monetize
information directly, packaging data at various prices for partners, customers, or themarket at large. Digital technology is an enabler of the syndication of data. In thedigital world, individuals as well as organizations will take advantage of opportunities
to monetize their data and create additional revenue streams. To do this effectively,
information flows must be managed and digitalized.

Digitalizing Information Flows
Information is today’s untapped resource. When information is managed effectively, itreveals larger patterns of activity to confirm performance levels, evaluate compliance,or deliver customer insight that can differentiate products and services. But how willorganizations find, analyze, and act on data to realize its full potential? Being able tocapture, preserve, manage, and build information-oriented applications is the next
frontier of competitive business. For the last 30 years, CIOs have been focused on
automating processes and transactions for structured data in systems of record with
ERP systems. In the decades to come, CIOs will concentrate on digitalizing processes
and transactions for unstructured information in systems of engagement.
When unstructured enterprise information is well managed, a company’s information
becomes powerful through the use of standardized information-oriented applications.
The more effectively FIs can collect, find, and process information in the context of
an application, the more effectively its employees and operations can function. FIs
can unlock the value of their data through information-based processes for suppliers,
employees, customers, cases, projects, and contracts.
Growth Agenda
Operational
ExcellenceStandardization
Performance
AgendaCompliance
Asset
Efficiency

New
Channels

Earnings

Customer
More
Satisfaction
Insight
Business
ReduceAgility
Cost

ReduceRisk

Competitiveness

Diverse CIO Agendas. Many EIM Value Propositions.
ECM

BPM

CEM

Information Exchange

FIGURE 3.10: Creating Business Value With Information

67

Analytics

CHAPTER 3

Migrating current information-centric processes to digital processes is an overwhelming
undertaking. The required approach is a break from the past and existing processes
to reinvent new processes using digital technologies. Streamlined information flows
help FIs take products and services to market at a faster rate, comply with regulations,and optimize the customer acquisition process to attract new customers and retain
existing ones.

Information Flows: Time-to-Market
When launching a new product or service, the goal is to accelerate time-to-market byrolling out new products and services with greater speed while decreasing innovation
cycles. A key aspect of this process is creating a compelling, omni-channel experiencefor prospects and current customers. The focus of websites and app design is toremove complexity in order to create a seamless, consistent, and engaging experiencefor customers.

CreateAdjustPublishConsume

FIGURE 3.11: Time-to-Market Information Flow

At the forefront of current web design trends is the need to create responsive web
layouts that adapt to support all devices from desktops and laptops to tablets andsmartphones. Launching a new product generates thousands of new content assets,
and they must be easy to access, incorporate, and update across touchpoints todeliver a consistent brand experience. Content should be personalized using a tailoredmessage and the channel most preferred by prospective customers. Web Experience
Management (WEM) technologies give FIs the ability to optimize customer experience
across all customer touchpoints.
The use of social media within the customer experience has also exploded as an effectivemeans of marketing products and engaging with younger consumers. FIs need to follow
their markets, and they have a captive one in social communities. WEM’s built-in social
media capabilities can be used to notify consumers on their favorite social sites about
new investment products or services. Updates are coordinated across platforms andchannels to ensure consistent messaging. FIs are increasingly differentiating themselveswith personalized customer communications to drive targeted marketing68

INFORMATION AND PROCESS FLOWS

to the most relevant prospective customers and partners. This includes personalizedbank statements that feature promotions for new investment products. These channel
activities can be automated and synchronized to accelerate time-to-market and improvecustomer experience for FIs.
In the following feature, Total Administrative Services Corporation (TASC) is more
effectively managing the flow of its information across disparate sources to improvecustomer experience and time-to-market.

Information Flows: Time-to-Customer Service
Banking, insurance, and investment management have entered a new era where
customer service and managing the customer experience are clear differentiatorsand crucial for success. Typically, in the financial sector, new customer attrition rates
are up to double or triple the average rate of established customers.12 This makes
client onboarding one of the most critical functions for any financial institution.
Client onboarding dictates the customer experience and establishes the relationshipwith the customer. It lays the foundations for long-term loyalty and satisfaction andincreases revenue, retention, and profitability through the potential for cross-selling
opportunities.
Client onboarding is also an area that draws scrutiny from industry regulators—andregulations may vary between different geographies and products, adding complexity
and impacting cost, capacity, and operational efficiency.

CaptureEvaluate

Collaborate

Process

FIGURE 3.12: Time-to-Customer Service Information Flow

Client onboarding has traditionally been a manual, paper-based process that can lead to
duplicate data entries, inefficient processing, lack of management visibility into pipeline
status, and disconnected customer service. To accelerate time-to-customer service,
FIs can use an EIM solution with Business Process Management (BPM) and adaptive
case management technologies to automate the process and provide secure, role-based
access to required information.

12

Christopher Wachtel, “Everyone knows it’s a good idea to greet new customers,” ABA Bank Marketing. March 31, 2011.

69

I N N O VAT O R S T O R Y

Total Administrative Services
Corporation (TASC)
The impact on TASC’s businesshas been rapid, with a whole
new level of visibility now
available, resulting in improved
customer experience and fastertime-to-market.

FIGURE 3.13: Call Center Monitoring Dashboard

As a third-party benefit administrator, Total Administrative Services Corporation (TASC)
provides a wide range of employee benefit solutions to clients in all 50 U.S. states. Those
services include flexible spending accounts, health savings accounts, tax-advantaged
medical insurance benefits, and a variety of options to assist Human Resources, including
corporate benefit administration and risk compliance administration.
TASC services over one million participants with its MyTASC web portal. The company
needed a Business Intelligence (BI) solution that would support such a large deployment
outside the firewall and be scalable as their customer base grew and new features wereadded. That tool had to seamlessly integrate into the MyTASC platform and pull fromits large data volume and disparate data sources, which include both structured andunstructured data. The BI solution also needed to access phone data—which comes out of
the Company’s call center—as well as data from its electronic workflow system and survey
data from spreadsheets produced in the marketing department.
An analytics solution was chosen for its scalability, and its ability to integrate with MyTASC
and draw from multiple data sources. Called “MyService Center”, the solution adds new
functionality to the MyTASC web portal, including a series of dashboards, scorecards,
and performance metrics. MyService Center offers TASC customers better accessibility,
visibility, and accountability. Those customers are now able to view call volumes related totheir business that come into the TASC call centers, as well as call handling times, claims
throughput, and the number of card transactions TASC is handling on a daily basis on theirbehalf. The impact on TASC’s business has been rapid, with a whole new level of visibility
now available, resulting in improved customer experience and faster time-to-market.

70

INFORMATION AND PROCESS FLOWSAs an initial stage in the process, EIM can be used to capture and extract data from key
documents such as proof of identification, cover letters, and signed agreements. In theevaluate stage, background checks are conducted to verify incoming applications for a
new account. Account representatives can then collaborate digitally with new clients ina secure file share to exchange current information such as proof of identity and proofof address and to establish and update personal details associated with the account. As
well as making the process faster and more efficient, BPM technologies help to makesure that the entire process is auditable for proof of compliance. An EIM framework
couples BPM with collaborative platforms and customer communications tools toprovide a seamless experience across applications and content formats—from paper
to digital.
One Process, Multiple Products

ID Existing
and New
Customers

Pre-screening
and Targeted
OffersID
Verification

Multiple Third-Party
Databases for
Non-customers

Workflow—15 Minutes or Less
• Pre-filled for existing clients• Ability to start in one channel, finish in another• Save and return• Help via chat, phone, or online

Clear Instructions to
Staff or Customer
Bank Databasefor Existing
Customers

Multiple Funding
Options: Deposit
Account,
Credit Card

Funding
Authorization
Instant
Verification

FIGURE 3.14: Automated Onboarding Process Flow

In a market where products and services have been commoditized, the provider withthe highest level of service and most effective onboarding process will win more newclients and gain competitive advantage.

Linking EIM to Business ValueFIs must combine information across many sources, both internal and external. They
need to be able to manage customer call records, customer emails, claims data, andinformation from CRM systems and payment systems. But they also need to be able todiscern which information is valuable, which is critical for keeping, which to dispose of,and how to harvest information to sustain its value. In order to unlock the potential of
their information, FIs need strong EIM solutions and strategies, infused with analytics
and process management capabilities.
EIM unites the front office with the back office. It helps financial institutions simplify
their business through process automation and standardized information management.
It is a transformational technology that empowers FIs to extract the value from theirinformation to make it more accessible, meaningful, and secure. When its value isrealized, information opens up new opportunities to accelerate the business across theentire ecosystem.
71

CHAPTER 3

Two things are certain in the digital world: digital information will be ubiquitous andmanaging it will be key to success. Currently less than 15 percent of organizations are
implementing strategic information management to drive their projects and outcomes.
This is changing as more organizations are realizing the strategic importance of managing
their information effectively.13
As data is commoditized, organizations will uncover and apply unique information
for differentiation. The closer and tighter the connections between structured andunstructured data, the more value can be extracted from it. Bringing this information
together—connecting business suites with information suites—is a unifying force that
produces a powerful foundation for innovation.
While ERP and other structured data-source platforms have been optimized over the
past 30 years, EIM presents rich business opportunities. EIM replaces the disjointed
and paper-based systems of the past with a consolidated and digitalized single source ofthe truth. EIM technologies support information in its many formats and connect it for
deeper insight, better performance, and greater opportunity. We’ll take a closer look at
how competitive advantage is created through managing consumer-related informationin the following chapter, “Digital Engagement”.

13M ichele Goetz, “Are Data Governance Tools Ready for Data Governance?” Forrester Research, June 25, 2014,
http://blogs.forrester.com/michele_goetz (accessed July 2014).

72

C H A P T E R

DIGITAL ENGAGEMENT

4CHAPTER 4

C HAPTER 4

Digital Engagement“An engaged customer builds a bond with their bank or credit union that every financial
institution would covet… 71 percent of engaged customers say they will use their current
bank for the rest of their life.”1
The traditional model for Financial Institutions (FIs) is based on a complex networkof branches, advisors, and agents. It has persisted for decades—until now. Digitaltechnologies and market pressures have combined to introduce new, disruptive
business models. The Cloud and mobile devices are accelerating the time it takes tobring innovative products and services to market. The digital consumer has emergedwith new needs and purchasing habits. New digital marketing strategies are required
to engage with these consumers and deliver experiences that exceed expectation. In an
industry where customer acquisition is the top priority, creating exceptional customer
experience is the key differentiator that will deliver competitive advantage.
Customers who are fully engaged bring additional revenue, greater wallet share, and thepotential to deliver a lifetime of value. They are more likely to rely on the FIs they haverelationships with for additional products and services, giving firms the opportunity to
cross-sell and upsell their products and services. And in turn, FIs are expected to listen
to what their customers want and use this information to shape their products, services,and channels to fully engage their customers.
Sign up for a new service to support an existing account, like online banking or overdraft protection
36.9%
1.5%
Add an additional account, like a new checking or savings account
30.6%
1.7%
Increase the overall balances of your existing account

49.6%

4.4%

Switch an account from another bank over to your primary bank
26.0%
1.8%
Obtain financial planning advice from your primary bank
1.2%

Open an investing account with your primary bank
25.4%
0.6%

34.5%

Fully Engaged

Actively Disengaged

FIGURE 4.1: Engaged Customers Will Bring a Lifetime of Value 2
1

Jim Marous, “9 Secrets to Building Customer Engagement in Banking,” The Financial Brand, March 11,2014, http://
thefinancialbrand.com/37507/bank-cross-selling-onboarding-engagement-marketing/ (accessed April 2015).

2

Ibid.

74

DIGITAL ENGAGEMENT

Currently, FIs are struggling to digitalize their products and services. Maintaining highservice levels while improving margins is a constant challenge. To deliver seamless andengaging experiences across multiple channels, FIs need to be able to extract value
from their information, optimize and personalize the delivery of this information, andmanage it securely. A winning formula requires a comprehensive Customer Experience
Management (CEM) solution—one that incorporates customer insights, omni-channeldelivery, responsive design, and targeted communications. To transform and drive
growth, FIs must deliver compelling experiences through the contextual understandingof their customers, while adhering to established information governance policies andstandards to guarantee security and privacy.

Digital is for Everyone
Customer experience is defined as the sum of all experiences over the duration of a
relationship between a consumer and an organization that delivers products andservices. The ideal outcome is a consistent experience that delivers relevant content,
products, and services across multiple touchpoints. Over the past two decades,
customer satisfaction in financial services has been declining.

0

59%
18
-4
56%
4

ars
ye

years
0+

FIGURE 4.2: Digital Access to Products and Services is Cross Generational 33

“ Understanding Financial Consumers in the Digital Era,” CGI Group Incorporated, 2014.

75

CHAPTER 4

In a global survey, less than 40 percent of customers reported positive customer
experiences with their financial institution last year.4 On average, nearly two outof three consumers would switch banks for better products and services. 5 Trust in
established financial brands is wavering after the recent financial crisis, the Occupy
Wall Street movement, and rising fees. This level of dissatisfaction opens up the playing
field for new entrants to capture market share. Amidst industry disruption, FIs must
work harder than ever to attract new customers and retain their current ones, while
cutting costs and continually innovating.
Millennials have now overtaken Generation X in the workforce. 6 As they earn moreincome and acquire more capital, Millennials are first-time home buyers and theinvestors of the future. They have grown up as digital natives, are fickle, and they believethat the ways we access our money and pay for goods and services will change overthe next five years. Millennials trust digital providers like Facebook and Amazon morethan they trust their local bank branch. In fact, 33 percent believe they do not require abank at all and 73 percent would be more excited if a financial offering came from a techcompany rather than their nationwide bank.7
While Millennials are clearly a demographic to target, the use of digital technology
to access financial services is not based on generation (or even income): digital is foreveryone. Digital devices enable access to information and services, whenever andwherever, making digital the preferred channel. By 2019, 87 percent of customers will
primarily access their accounts online or using a mobile device. 8 This move to digital isreflective of a shift in how consumers—of all ages—are interacting with their world today.
Financial consumers want choices in how they transact, whether it be using cash, debit
cards, credit cards, PayPal, or mobile wallets. They also want to be able to access theirfinancial information at any time. The more real-time the interactions are, the more
readily consumers can access a complete view of their wealth—from total spending to
the value of their investments as they fluctuate. FIs of the future will play an advisoryrole that makes recommendations on loans, budget allocations, investments, andinsurance policies based on consumer behavior and spending habits.

4

Jim Marous, “Top 10 Retail Banking Trends and Predictions for 2015,” The Financial Brand, December 2014,
http://thefinancialbrand.com/46189/2015-top-banking-trends-predictions-forecast-digital-disruption/ (accessed May 2015).

5

“ Understanding Financial Consumers in the Digital Era,” CGI Group Incorporated, 2014.

6

Richard Fry, “Millennials surpass Gen Xers as the largest generation in U.S. labor force,” Pew Research Center, May 11, 2015,
http://www.pewresearch.org/fact-tank/2015/05/11/millennials-surpass-gen-xers-as-the-largest-generation-in-u-s-labor-force/(accessed May 2015).

7

“ The Millennial Disruption Index,” Scratch Viacom Media Networks, 2013, http://www.millennialdisruptionindex.com/wpcontent/uploads/2014/02/MDI_Final.pdf (accessed May 2015).

8

Ibid.

76

DIGITAL ENGAGEMENT

Digital is creating opportunities for FIs to be more than just a place to deposit moneyor purchase insurance. On a global basis, only seven percent of people currently
consult their banks for advice.9 New business models are needed to build new levelsof engagement. An enduring FI and consumer relationship is based on the successful
exchange of information. FIs have access to very detailed customer information andconsumers expect to be rewarded for this with value-adds like targeted offerings,
information, discounts, and other loyalty programs. Consumer expectations are rooted
in FIs helping them to achieve life-enhancing goals like spending wisely and saving
money—contributing to an overall improved quality of life. At the same time, technology
is forcing established FIs to rethink how they offer products and services, and makethem better.
In the following feature, Citibank exemplifies how FIs must shift their business models tofocus on the customer first in order to deliver exceptional experiences and differentiatethemselves in a crowded and competitive marketplace.

Mobile Engagement“With Bitcoin, Apple Pay, and better peer-to-peer payment solutions, consumers will easily
integrate device-driven payment experiences into their daily lives and will find greater
preference for these simple and seamless ways to transact with businesses…”10
Mobile shoppers represent a shift toward a mobile-centric lifestyle in which information,
goods, and services are increasingly accessed through mobile devices. Mobile devices
constituted one in four online purchases last year.11 Digital consumers expect digitally
focused experiences that provide greater value than content that is optimized for web
pages or basic apps. Mobile presents FIs with opportunities to deliver more targeted
products and services using killer apps that combine context and mobile features with
content and analytics.
To date, FIs have focused on replicating their online services on smartphones andtablets. Most major banks offer mobile apps that help consumers make routine
transactions or locate the nearest ATM. A recent study identified that 63 percent ofsmartphone users interact with their bank regularly using a mobile app, which can becompared to less than half of this percentage for insurance and investment management.
Currently, FIs are not taking advantage of the pervasiveness of mobile devices and theirrich functionality to create more personalized offers, build communities around theirbrand, and develop sophisticated services.
9

“ Understanding Financial Consumers in the Digital Era,” CGI Group Incorporated, 2014.

10

Jim Marous, “Top 10 Retail Banking Trends and Predictions for 2015,” The Financial Brand, December 2014,
http://thefinancialbrand.com/46189/2015-top-banking-trends-predictions-forecast-digital-disruption/ (accessed May 2015).

11

Jaimy Szymanski, Brian Solis, and Rebecca Lieb, “The Inevitability of a Mobile-Only Customer Experience,”
Altimeter Group, 2014.

77

TRANSFORMATION IN ACTION

Citibank
Citibank is the consumer division of Citigroup, a publically tradedfinancial services multinational headquartered in New York City and thelargest bank in the U.S. based on total assets. Citibank operates aroundthe world with 3,777 branch locations in 36 countries. In addition tooffering standard banking transactions, Citibank markets insurance,
credit cards, and investment products. Citibank’s online services
division is among the most successful in the industry claiming about 15
million users. This success is due in large part to the company’s focus
on digital innovation. The bank collaborates with technology vendors
on leading-edge solutions for their business. Citibank leads the way interms of adopting new technologies and transforming their services tosurpass the expectations of their digital customers.

FIGURE 4.3: Citibank Introduces New Ways to Pay Digitally

What follows are excerpts from an interview with Simon Chiang, Head of International Cards,
Global Consumer Technology at Citibank. In the interview, Mr. Chiang discusses the bank’s stateof-the-art card technology and how the industry has been disrupted by digital technologies and thedemands of the digital customer.

78

TRANSFORMATION IN ACTION“The financial services industry has completelytransformed itself and its services for thedigital customer. As customers become moreconnected, they want to access their financial
information and services online, using theirmobile devices, on demand, from any location.

We realize security concerns are top ofmind for users, especially when they aremaking payments online or sharing financial
information. But a new technology called‘tokenization’ introduces heightened levelsof security for payments made at point-ofsales (POS) terminals, either by card or bymobile device. With tokenization, sensitive
customer data is encrypted at the point where
it is captured (the card is swiped or detected
wirelessly) and sent to the merchant’s payment
processor where it is decrypted and thetransaction is authorized. A token representing
the entire transaction is then sent back to theretailer indicating approval. With tokenization,
sensitive customer data doesn’t reside on theuser’s device. As well, customer data is not
actually shared with the merchant. Instead, it is
the token that stays on file and is stored on themerchant’s network as proof of purchase.

They are looking for more convenient and fasterways to make purchases. This has required us
to re-invent our processes, moving them online
and leveraging technology for fast, accurate,and secure information exchange between
consumers, merchants, their banks, and othertrading partners.
To support the digital customer, payment
methods have evolved. From credit cards todebit cards to pre-paid mobile cards, technology
enables these digital transactions. In addition,
mobile payments—or making payments with asmartphone—are gaining traction with many
consumers. The Apple iPhone 6 and Apple Pay,for example, provide consumers and merchants
respectively with Near Field Communications(NFC) capabilities to enable ‘pay-by-touch’transactions. NFC makes use of short-range
wireless technologies to detect the customer
within short physical distances.

At Citibank, we are focused on meeting theneeds of the digital customer: we stay on thecusp of new advances in technology and weare always exploring innovative ways to servethem. But, ultimately, the technologies we adopt
need to improve our customer experience. As
our processes move toward digital channels, thecustomer experience is paramount. We strive
to give each customer a consistent experience
across all our channels, including their mobile
devices, the Internet, ATM, branch, andInteractive Voice Response (IVR) channels. We
want our brand to be consistent, regardless ofchannel, and the experience to be personalized
and relevant. Collecting, managing andleveraging customer information allows us tobetter understand our customers and tailor the
Citibank experience to their needs.

With many exciting technology changes
impacting financial transactions, Citibank islaunching Apple Pay in the U.S., and it willsoon be rolled out to the international market.
While mobile payment is gaining traction, broaduser acceptance will take some time. People—
especially those over the age of 45—are used tocarrying and paying with plastic credit cards.
They need to be convinced that mobile payment
is a secure method of transacting. Despite thisbarrier to adoption, we predict that within ten
years, 50 percent of payment transactions
will be made using smartphones. We expect
to roll out new merchant terminals with NFC
capabilities over the next five to ten years. To
support this move to mobile, we are working
hard to promote the advantages of mobile
payments and drive user acceptance.

To this end, we have invested a lot of resources
into the area of predictive analytics. We areusing all the consumer data we capture tounderstand our customer’s spending patterns.
This data allows us to profile a customer,
segment them, and push product or service
offerings to him or her at the right time. To

79

TRANSFORMATION IN ACTION

do this, we also use geo-fencing to define
geographical boundaries around a given
retailer—whether it be a store in a mall ora specific POS terminal. When a customer
with a relevant profile crosses the boundary,
this triggers the delivery of 'location specific'
advertisements to their mobile device. Geofencing fosters engagement with customers
using the most highly contextual, personal, andrelevant channel possible: their mobile devices.
It's the most targeted advertising a brand can
do right now. It’s where hyper-local meets
hyper-relevant.
Along with helping to deliver an optimized
customer experience, mobile and otherdisruptive digital technologies are significantly
impacting the financial services industry. Our
business has been transformed and continues
to be transformed by new technologies thathave changed our markets, shifted our channels,
and modified the way we engage and operate.
Information and its effective management hasgiven us a competitive edge and helped us not
only to succeed but also to establish ourselves
as innovators in our industry.”80

DIGITAL ENGAGEMENT

Data

ic
ph
ra ity
g
m
eo xi
G Pro

Pre
fer
en
ce

vices
Ser

Buying
Beh
avi
or

s

FIGURE 4.4: Mobile - Know Your Customer in Context

FIs can use mobile engagement to change the way they market, sell, and deliver services
to consumers. Mobile technology gives users access to their accounts and markets attheir convenience. It enhances these services with the ability to offer proximity-basedand contextual information for innovative and more personalized banking services.
Mobility not only gives salespeople the opportunity to close deals more quickly withreal-time information and quotes, but it can also enable them to reach new customer
groups with innovative mobile-based offerings.
When mobile features are combined with targeted apps and back-end processes, mobile
creates opportunities to strengthen customer relationships through richer and moresatisfying experiences. More progressive insurers, for example, are taking advantage
of mobile capabilities like GPS, cameras, sensors like telematics, and notifications—and integrating these into core applications to make insurance claims more efficient.
Examples include insurance policies that are based on a “pay as you drive” usage, which
integrates cars, mobile phones, and technologies like Apple’s CarPlay ® and Android
Auto. Using their mobile phone cameras, customers are able submit photos for auto or
home claims, accelerating claim settlements and reducing loss adjustment expenses.
Allstate Insurance has introduced an app that enables customers to conveniently file forclaims immediately following an accident using mobile phone cameras.12
Advanced mobile technologies provide greater services, superior experience, andstronger security. Both GPS and biometric identification can be used to augment
payments to validate identity or detect fraud. Some FIs are replacing face-to-faceinteractions with low-cost virtual meetings through video-enabled ATMs, calls, andmobile web conference apps. The Internet of Things (IoT) promises to enhance customer
experience by connecting sensor-based data with applications to warn consumers
about theft or fire, help them document their losses, and streamline the experience bysubmitting claims using a mobile device.
12

Val Srinivas, Sam Friedman, and Jim Eckenrode, “Mobile Financial Services,” Deloitte University Press, 2014.

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CHAPTER 4

FIGURE 4.5: Mobile Insurance

Mobile context creates opportunity. When it is combined with customer analytics, it
helps FIs determine customer expectations to better understand and meet their needs.
Mobile is a critical channel in the customer journey. Successful FIs will strategicallyplan to understand their customers and meet their mobile needs at every touchpoint.
In the digital world, FIs will be tasked with re-platforming processes, channels, andapplications for mobile enablement.
Inside the enterprise, mobile solutions have the capacity to improve external customerfacing services and internal operations. Along with ease and convenience, the access toreal-time information that mobile devices provide allows for faster and more informed
decision-making. Wealth management consultants, financial advisors, insurance agents,
mortgage lenders, and other representatives can pull up real-time information about
customer accounts, portfolios, and transaction history when meeting with clientsoutside of the office. The ability to safely scan or directly import enrollment forms, loan
applications, and other documents using mobile devices that are securely connectedto the corporate network empowers representatives to quickly process customer
data. From a back-office perspective, mobile devices give FIs the option to digitalize
their processes and information, improving operational efficiencies and cutting costs
associated with printing and mailing documents to customers, as well as eliminating
lengthy response times.
Despite the opportunities and benefits that mobile presents, FIs have yet to mobilize
their products and services. Out of 63 percent of digital enterprises, only 17 percent have
implemented an integrated mobile strategy.13 In the digital world, FIs will be required toinvest in mobile engagement to integrate the experience across transactions, payments,and loyalty programs.
13

Jaimy Szymanski, Brian Solis, and Rebecca Lieb, “The Inevitability of a Mobile-Only Customer Experience,”
Altimeter Group, 2014.

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DIGITAL ENGAGEMENT

iPad
9:45 AM
100%

FIGURE 4.6: Mobile Access to Investment Portfolio Management

Social Engagement
The quality of customer experience in the financial services industry is declining. With
new entrants flooding the market, social provides an additional channel to deepen
customer engagement. Some banks are taking advantage of the levels of engagementthat social offers. RBC in Canada, for example, gives customers access to their accounts
through Facebook but they manage all monetary exchanges and transactions on theback end. Other banks in developing nations are building their entire operations on topof sites like Facebook and providing transactional access using mobile phones.14
Despite these examples, many FIs are underutilizing the social channel. In a recent study,
42 percent of the banks surveyed said they have no plans for transactional capabilities via
social media, and 58 percent stated they would not offer access to account information
on social media sites.15 As an important target market, Millennials have identified adesire to access their finances on social networks. In fact, up to 44 percent of consumers
that use social media sites use them to interact with financial institutions specifically.16
In order to stay relevant in the digital world, FIs will need to embrace all the channels
that their customers use. Social networks give FIs additional ways to attract customers,
improve brand presence, provide real-time information, deliver customer support, andreward loyal customers to increase overall customer satisfaction.

14

 om Groenfeldt, “Bank Clients Want Social Media Account Access,” Forbes, April 25, 2014, http://www.forbes.com/sites/Ttomgroenfeldt/2014/04/25/bank-clients-want-social-media-account-access-capgemini/ (accessed May 2015).

15

“ World Banking Report 2015,” Capgemini and Efma, 2015.

16

 renna Keough, “9 Social Media Marketing Solutions for Banks and Credit Unions,” The Financial Brand, March 4, 2015,
B
http://thefinancialbrand.com/50594/social-media-marketing-strategies-in-banking/ (accessed May 2015).

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CHAPTER 4

Information Gathering
56%

37%

8%

Servicing
48%

43%

9%

Social/Collaboration
32%

51%

17%

Transacting
16%

42%

42%

Account Information
14%

29%

Implemented/Under Implementation

58%
Offer in the Future

No Plans/Unlikely to Offer

FIGURE 4.7: How Banks are Implementing Social Media

Using platforms like Twitter, YouTube, and Facebook, FIs can attract new customers andgrow their business. Customer acquisition is a top priority for FIs—and an expensive
investment. FIs typically spend from $70 to $300 to attract a new customer. This cost
can be reduced by as much as 30 percent using social media. Despite this number, only
33 percent of FIs today are using social channels to acquire new customers, in contrast
to the retail market, which uses 73 percent, with an average cost per customer of $22.17
Once new customers are acquired, FIs can use social media to maintain an ongoing
dialogue with their customers. Social media sites give FIs the opportunity to crosssell and upsell products and services to a captive, opt-in audience. Customers whointeract with companies via social media buy up to 40 percent more products andservices.18 Additionally, FIs can mine their social networks or video sharing platforms
for sentiments, comments, likes, and other information to gain insight into theirbuyers. Applying analytics to social networks helps FIs target consumers with the rightmessages at the right time. Customers benefit from real-time customer service, special
rates, promotional offerings, and loyalty programs. FIs benefit from delivering more
personalized services, the ability to refine their campaigns, and even the opportunity to
crowdsource products and services.

17

Mandy McEwen, “3 Ways To Improve Digital Marketing For Financial Services,” Mod Girl Marketing, January 2014, http://
www.modgirlmarketing.com/digital-marketing-financial-services/ (accessed May 2015).

18

Michael Chu et al, “The social economy: Unlocking value and productivity through social technologies,” McKinsey Global
Institute, July 2012.

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DIGITAL ENGAGEMENT

As well as providing insights into customer personas and purchasing patterns, socialsites are a cost-effective way to generate interest and increase awareness. FIs can use
social communities to share relevant information, market updates, policy information,
investment advice, and reward key advocates of their brand. Traditional and expensive
marketing campaigns are circumvented as FIs directly connect with their customers to
discover their needs and increase trust and loyalty in the process. Using social media,
FIs are able to more effectively deliver their messages to their younger demographics,
higher income earners, and even the “under-banked” with greater impact, addressing
their financial needs at a specific moment in time.
As part of the marketing mix, social sites can be used to augment advertising with aflexible model that can be tested and refined for greater affordability and effectivenessover time. This levels the playing field as smaller FIs are able to compete with moreestablished brands, enabling community-based brands to disseminate their message
with wider reach. When social media strategies are effectively implemented, they
improve overall marketing effectiveness and can boost revenues by as much as
5.2 percent.19
Likewise, FIs can be more productive and reduce costs by using social media tools
internally to provide a seamless and rich collaborative experience for employees. Acrossall industries, organizations that make use of social media tools have experienced a 20
percent increase in employee satisfaction, are up to seven percent more productive, andhave discovered that when employees are engaged, retention rates increase by as muchas 87 percent. 20
Empowered employees can connect immediately, exchange information, and participate
in conversations in real time. Digital tools like social and video help to ensure thatmarketing, sales, and customer support teams are aligned to manage cross-functional
channel interactions. Giving customer-facing employees access to the same self-service
tools that customers use produces superior outcomes—more agile organizations, happiercustomers, and even cost reductions of up to 80 percent by digitalizing processes suchas new account opening and loan origination. 21
FIs can leverage both social and mobile channels to increase customer engagement anddeliver more satisfying customer experiences. They can also leverage these channels
to collect customer data that will help them to understand and know their customers.

19

Mandy McEwen, “3 Ways To Improve Digital Marketing For Financial Services,” Mod Girl Marketing, January 2014, http://
www.modgirlmarketing.com/digital-marketing-financial-services/ (accessed May 2015).

20

Frederico Herrera, “The Digital Workplace: Think, share, do,” Deloitte Canada, 2011.

21

 nnette Tirabasso and Kimberly Spears, “The Silver Lining in Lending: Turning Doubters into Online Believers,” DeloitteA
Development LLC, May 2008.

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CHAPTER 4

A 360-degree View of the Customer
FIs have exhaustive data about their customers, including transaction histories, contract
center records, and other sources. The Internet, mobile banking, and social networks
also produce a lot of useful information about customers. But finding the business value
in that data can be difficult. Analytics technologies help banks to increase revenue
and loyalty by improving customer satisfaction. When analytics are combined withemerging technologies, customer data can be used to maximize engagement throughrich digital experiences, creating new income streams for FIs and producing moredetailed customer data.
In the digital world, successful FIs will rely on analytical tools to gain a 360-degreeview of the customer. Types of analytics FIs can leverage to improve efficiencies andcustomer experience include purchasing patterns, social media, website metrics,
sentiment analysis, standard reports, customizable dashboards and alerts, andpredictive modelling. Dashboards and alerts, for example, present users with a selfservice, user-created environment where they can interact with, visualize, and filter
information to identify trends and drill down to view specific details. Overall wealth canbe assessed based on account performance, transaction history, and spending. Updates
are contextual and specific, based on the federation of information across applications
and repositories.

iPad
9:45 AM
100%

FIGURE 4.8: Using Analytics to Assess Overall Wealth86

DIGITAL ENGAGEMENT

Analytics can transform static statements into dynamic interactive portals thatengage individuals and institutional clients in a low-touch, highly interactive solutionthat optimizes customer experience. By merging relevant, targeted information andembedding analytics into their online offerings, FIs are making it possible for customers
to explore other financial avenues while they perform their routine tasks.
Across every channel, data and interactions enable deeper connections with consumers
on a more emotional level, helping FIs shift to a partner-based advisory role and better
meet customer needs. Demographic data can be combined with contextual, locational,
channel, sentiment, and/or behavioral data to determine customer content preferences
and build buyer personas. A deeper understanding of the customer has become astrategic objective in the financial services industry. In the feature below, DNB Finans
is applying analytics and Business Intelligence (BI) to keep consumers informed andimprove customer satisfaction levels.
In the digital world, the traditional sales funnel will be replaced by an orbital model,
centered on the customer and defined by interactions and long-term relationships.
Conversations will be direct and feedback immediate. As guardians of consumer
finances and highly confidential information, FIs will need to ensure security to build
trust. New digital marketing strategies will help them to further leverage their data andservices to deepen engagement.

Mastering Digital Marketing
According to research, 90 percent of marketers believe that connecting digital marketingtactics improves overall marketing return on investment. To adapt in the digital world,FIs will have to adopt digital marketing campaigns that enable them to engage with theircustomers in new ways. Instead of identifying customer needs sporadically, based on
major life events, they will engage with customers on a constant basis, providing the
support they need to complete ongoing financial tasks and transactions in their momentof need. 22
Established FIs can no longer rely on physical interaction; instead they must assume
the role of financial advisor, providing insight and recommendations to their consumers
on a persistent basis. Their focus will shift to a digital marketing strategy that createscompelling customer experiences at every touchpoint—both digital and physical—
through omni-channel delivery, responsive design, digitalizing the customer journey,
and targeted communications and information.

22“ The Future of Customer Acquisition,” The Corporate Executive Board Company and Tower Group, 2015.

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I N N O VAT O R S T O R Y

DNB Finans
DNB Finans
anticipates a returnon investment for
the analytics andreporting system
within 2.5 years.

FIGURE 4.9: DNB Finans

DNB Bank Group in Norway is Scandinavia’s second largest bank, employing 13,430
people and managing total assets worth €250 billion ($273 billion U.S.). Its subsidiary,
DNB Finans, is one of the largest finance companies in the Nordic region. In the private
sector, the organization has a dominant position in the car financing market with more than
300,000 financed vehicles in its portfolio.
DNB Finans is always looking for new ways to add value for its customers. The most valued
services it can offer are those that help businesses control costs by providing greater
visibility on their spending. To this end, the Autolease division of DNB Finans wanted todeepen the BI it provided its clients. For example, the system could provide up-to-datestatistics to help customers keep track of all car-related costs, including information about
fuel use, CO2 emissions, leasing costs, damage reports, and fraud alerts. At the sametime, the Company needed to establish customized cost-center structures so that clientswould be able to monitor activity by business unit. It was important to DNB Finans that thesoftware would be easy to use without training—the goal was to achieve a user experiencethat was similar to consumer social networks like Facebook.
The Company rolled out a BI and reporting solution to be used by more than 30,000 leased
car customers. The solution is highly intuitive, featuring colorful visual representationsof data, including dashboards for users and logical controls for fraud detection andeasy administration of car fleets. Since the deployment, DNB Finans has seen customer
satisfaction levels rise from 4.4 to 5.1 on a scale of 1 to 6 for “quality of reporting solution”.
The system has also drawn an additional 31 percent in user logins, increasing activity on
the car financing system. DNB Finans anticipates a return on investment within a short
2.5 years. Its customers now have early visibility into issues like excessive mileage or fuelrelated fraud, and are able to pinpoint the business units responsible, enhancing their ability
to act and increasing their loyalty through valuable business information. This solution
gives the Company a significant competitive differentiator in a crowded marketplace.
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DIGITAL ENGAGEMENT

Reason for Financial Product Purchase
Respondents were asked their main reason for acquiring their last new financial product or service

Branch-oriented Customers

31%

10%

30%

Digital-oriented Customers

31%

8%

38%

26%
21%

Dissatisfied
with Another
Product

2%
100%

0%

Responded to
an Attractive
Product Offering

3%

Learned That I
Had a Need for
the Product

Life Event Caused a
Need for a New orDifferent ProductOther

n=2,343
Source: CEB 2013 Customer Experience Survey

FIGURE 4.10: Persistent Engagement Through Digital Marketing

The Omni-Channel Experience
The dynamic of engagement has changed. Today, reaching consumers requires a complex,
multifaceted approach across many channels. Banking provides a good overview of thisrequired approach. Over the past 20 years, the average number of branch-based banking
transactions has declined by 45 percent in the U.S., Canada, and Europe. 23 People are
increasingly turning to digital channels to conduct financial transactions. Despite thistrend, banks must please all types of consumer, and each consumer requires a mix ofmarketing approaches across a unique and targeted mix of channels.
A branch-oriented bank customer prefers to purchase new products and services
through the branch, whereas digitally oriented customers rely on digital channels to
conduct research, transact, and purchase new products. Branch-oriented customers
are more likely to visit the branch weekly, several times a month, or monthly. Digitallyoriented customers only visit their local branches once every couple of months orless. In fact, 13 percent of digital customers never visit the branch and 14 percent visit
their branch once a year. A growing number of customers prefer to purchase products
through digital channels and rarely interact with their physical branch. 24
While digital technologies have created new customer touchpoints with increased
opportunities to engage, face-to-face interaction remains a significant sales andengagement channel. Consumers use many channels to interact with FIs. In fact, 88
percent of customers interact with their banks using at least two channels, and 46
percent use three or more in a year. 25 Leading FIs have to be laser focused on ensuring theconsistency and relevancy of messages they deliver across all channels. This approachachieves superior results in return on marketing investments, customer satisfaction,and revenue.
23

A lyson Clarke, “The Future of the Branch Lies in Digitally Empowering Employees,” Forrester, November 25, 2014.

24“ The Future of Customer Acquisition,” The Corporate Executive Board Company and Tower Group, 2015.

25

T iffani Montez, “The State Of North American Digital And Multichannel Banking 2013,” Forrester, April 2, 2013.
89

CHAPTER 4Internet

ATM

MobileBranchPhone

Social Media

2013

60%

50%

13%

16%

11%

NA

2014

57%

46%

22%

14%

8%

10%

Percentage of customers interacting with channels at least once per week
FIGURE 4.11: Channels Customers Are Using to Interact With Their BanksEngagement with financial brands is evolving from a multi-channel experience to anomni-channel experience. Omni-channel focuses on meeting consumer needs by pulling
together programs to provide a consistent brand experience across channels, platforms,
and devices. As customers become more mobile, a consistent experience becomes vital.
If a customer visits a retail bank website on a desktop but switches to a smartphone at
the time of purchase, the mobile view should maintain the same look, functionality, andcontent as the desktop view. Customers do not see individual devices or channels; theylook for a consistent and familiar brand experience.
An adaptive and responsive approach helps marketers fuel an ongoing conversation
with the consumer. Using responsive design, FIs can manage a single site that caters to
all device platforms, sizes, and resolutions. A single video can be dynamically renderedto adjust to the screen size of a mobile device, a website, and a stadium jumbotron.
An adaptive design extends the experience with closed captions or plays the audio ina listener’s preferred language. Tethered syndication allows each touchpoint to talkto other available touchpoints to optimize experience. Consistently branded content
creates a more satisfying end-user experience and enables FIs to positively impact thecustomer journey.

It’s All About the Journey
Customer journeys document the experience customers have from initial desire
through to fulfillment. This includes all points of engagement or the touchpoints thatcreate the overall brand experience. Currently only one-quarter of organizations
across all industries have completely mapped the customer journey to understanddigital touchpoints. 26

26

Jaimy Szymanski, Brian Solis, and Rebecca Lieb, “The Inevitability of a Mobile-Only Customer Experience,” Altimeter Group,
2014.

90

DIGITAL ENGAGEMENTFIGURE 4.12: Consistent Branding Across Channels and Devices

Customer journeys are based on data collected across various touchpoints—
transactions, interactions, social media sites, and devices. Analyzing this data leads tocustomer insights, and these must be tied back to actions that drive automated, internal
processes and the delivery of content and services. This should all happen on the fly, in
response to customer needs, to influence their decisions at the moment of need.
FIs will be required to engage customers at every stage of their digital journey because
two-thirds of the decisions that customers make are informed by their experiences thatmark the journey. 27 In Figure 4.13, a hypothetical customer journey of a consumer buying
a car is portrayed. A prospect watches a video commercial posted to YouTube and follows
it to the manufacturer’s website for more information. A GPS system on their phonealerts them to a dealer located close by. Before they even visit the dealership, their banksends notification to let them know that they are pre-approved up to a certain amount.
A promotional price may be offered if the dealer and the bank are partners. Because
the entire experience or journey is orchestrated to capture preferences and facilitate
a seamless experience, the bank is able to engage with the consumer in the momentof need. The value of the information collected at each touchpoint is used to increase
empowerment, reach, and insight.

27

“Cisco Consumer Experience Report for Automotive Industry: survey of 1,511 consumers in 10 countries,” Cisco, May 2013.

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CHAPTER 4

83% Online
Research

37% TrustAutomaker
Websites

Repurchase

57% Trust
Driverless
Car

74% Share
Driving Habits

55% VirtualInteraction
with Dealer

64% AutomatedDealer for Service
FIGURE 4.13: Financial Services Touchpoints in a Car Buyer’s Journey 28

Effectively managing customer data is critical to optimizing a customer journey. If a firm
can predict customer behavior, it has a better chance at delivering what a customer
expects. This is referred to as “contextualization”, and it defines digital experiencesthat adapt to a consumer’s context. 29 To deliver a contextual experience, FIs can use
tools that combine historical (buying behavior including barcodes or pathways througha website), situational (geo-location), and demographic (profile-based) data. Content istargeted and personalized, anticipating the needs and buying behavior of each consumer
to offer location-based products or services at the most opportune moments to buy.

Targeted Customer Communications
Streamlined communications give banks, insurance companies, and wealth management
organizations the opportunity to engage with their customers using the right channel tooffer services at exactly the right moment in their buying journey. The most effective
way to do this is to target different audiences with different messages, focusing on
products and services with the greatest appeal for each segment.

28

 dwin van Bommel, David Edelman, and Kelly Ungerma, “Digitizing the Consumer Decision Journey,” McKinsey & Company,
E
June 1014, http://www.mckinsey.com/insights/marketing_sales/digitizing_the_consumer_decision_journey(accessed May 2015).

29

Ron Rogowski, “Digital Customer Experience Trends to Watch, 2013,” Forrester Research, 2013.

92

DIGITAL ENGAGEMENT

iPad

9:45 AM

100%

FIGURE 4.14: Targeted Correspondence Increases Loyalty and Profitability

Dynamically generated customer communications give FI marketers direct, handson capabilities for creating and launching marketing campaigns as well as ongoingpromotions, for example, to accelerate the adoption of a new credit card product, atime-sensitive loan-rate offer, or a new benefit tied to a higher account status. Upselland cross-sell campaigns can be delivered directly to customers through regularcommunications, such as statements or notices or as part of a customer-initiatedconversation with a call center or bank staff. Marketing materials like these can becreated and launched automatically for higher efficiency.
FIs require access to accurate data to manage consumer correspondence. Informationis consolidated from multiple back-end systems to create a single portfolio view of eachcustomer. This information is then combined with the context of the customer’s current
situation to automatically produce targeted communications. When correspondence ispart of a digitalized process, manual handling and human error are significantly reduced,
thereby increasing overall efficiency and customer satisfaction.
Every financial customer wants to be treated as a known individual. This is dependent on
making sure that recommendations are relevant to a person’s profile and history—theirdata, including clicks and transactions. Streamlined communications based on accurate
data help FIs produce more timely exposure to offers and increase profitability. Thisis demonstrated in the following feature in which FWD is using streamlined customer
communications to deliver innovative products and enhance customer experience.
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I N N O VAT O R S T O R Y

FWDStreamlining customer
communications has
given FWD a competitive
advantage by allowing
them to deliver a more
personalized andconsistent experiencethat exceeds customer
expectations.
FIGURE 4.15: FWD

FWD is the insurance business arm of the private investment group, Pacific Century
Group. FWD’s business spans Hong Kong, Macau, Thailand and the Philippines, offering life
insurance services, as well as general insurance, employee benefits and financial planning
services in Hong Kong. FWD also has a brand presence in Indonesia. FWD’s strategic focus
is to leverage technology to enhance customer experience, deliver innovative products,
and invest in talent to create a leading Pan-Asian life insurer that changes the way people
feel about insurance.
To meet customer expectations and drive new business, FWD needed to improve thequality of their customer-facing communications, as well as the business processes behindthem. FWD saw the opportunity to build new relationships with customers and deepen
their levels of trust and confidence through improved information exchange. They werelooking for a solution to engage more consistently—and profitably—with customers, while
improving the efficiency of underlying business processes. To add to the challenge, thissolution would need to work across multiple interfaces, and in multiple languages.
FWD rolled out a Customer Communications Management solution across four locations(Indonesia, Macau, the Philippines, and Hong Kong). The implementation has streamlined
communications and enabled FWD to deliver a personalized and consistent experiencethat exceeds customer expectations. With improved operational efficiency and directcontrol over content, business managers can react faster to changing market conditions
to seize new opportunities, using direct hands-on communications to increase customer
retention and revenue. The solution is positioned to support FWD as its business grows—
expanding into new languages and interfaces, all with minimal demand on IT resources.
In the insurance industry, delivering exceptional customer service is what sets agencies
apart. Optimizing their customer correspondence has given FWD competitive advantage
through optimized customer engagement and experience.
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DIGITAL ENGAGEMENT

Seamless Information FlowsAs digital engagement progresses beyond a simple point-and-click, FIs will streamline
communications based on integrated information flows across the business. In order todeliver a consistent end-to-end experience across many touchpoints, FIs will need tointegrate front- and back-office technologies and processes with a complete information
strategy that delivers individualized customer experiences at each point of engagement.

s

e

Di g
i ta
l
Digi
ta
C

Vid
e

tic

ience Mape rna
xperienc
lE
tom
us

nt
me
ge
Hub
er

Ex

aly
An

o

MarketingAutomation &Email MarketingC
R us
Maelati tome
na ons r
ge hi
me p
nt

ise
pr iester tor n
En osi ratiop
Re Integ&SocialFIGURE 4.16: Disjointed Digital Engagement

Within many FIs, the current technology layers that support customer engagement are
numerous and disjointed, consisting of different applications from a variety of vendors.
At the customer interface, rich digital solutions are required to support the evolutionof a brand’s publishing points—from tablets to kiosks to mobile devices. Behind thecustomer-facing applications are the systems ranging from Web Content Management(WCM) to Customer Relationship Management (CRM) systems and various BI andanalytic tools. In an ideal system, each technology works to optimize digital engagement
and extend to the virtual business network. The connections between these systems
should be relatively easy to track, but how does the digital FI bring this all together for
accuracy and consistency?
A Customer Experience Management (CEM) platform combines software applications
that help organizations create richer, more interactive digital engagement acrossdevices and channels without sacrificing information governance and compliance.
CEM empowers the digital FI to capture audience expectations, process requests,
search for relevant content, curate user-generated content, assess consumer activities
for analysis, and present actionable data to create exceptional digital experiences.
Video, rich media, and personalized content can be created collaboratively, publishedseamlessly, and shared ubiquitously to surprise and delight customers at every turn.
95

CHAPTER 4

rketing
Ma erience
p
Ex

Com
Expe munrie itynce

Brand
Exper ience

Information
ExchangeSepExrer vic
ie e
nc
e

g e
yin c
B u riene
Exp

FIGURE 4.17: CEM Creates Value Across the Customer Lifecycle

Information Management Drives Differentiation
With improved customer experience comes increases in customer acquisition,
retention, and efficiency. In the digital world, FIs will focus on re-architecting theirback-office systems, consolidating their data, and creating digital front-end services
that are consistent across every channel. From mobile devices to smart watches andeven cars—FIs will digitalize the entire customer journey to target consumers withproducts and services when and where they need them. Improved customer experience
relies on an effective CEM solution and an underlying EIM strategy. Armed with thesesolutions, FIs can transform unstructured data sources into levers of competitive
advantage and profitability.
In the digital world, FIs will consolidate customer experience solutions on a single
engagement platform. This will empower the enterprise to maximize the potential of its
information to reach new markets and gain competitive advantage. As digital disruption
triggers the creation of new engagement models, their reach will extend outside theenterprise and all along the supply chain. In the following chapter, we will look at how
the financial services supply chain is being disrupted and how firms can digitalize key
processes for greater collaboration, information exchange, and business agility.

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C H A P T E R

THE FINANCIAL SUPPLY CHAIN

5CHAPTER 5

C HAPTER 5

The Financial Supply Chain“The financial services industry is in the early stages of a significant digital transformation.
With investment in fintech rising to $12 billion in 2014, the financial services industry is wellfunded to drive unprecedented change. Historically on opposite sides of the playing field,
smart fintech firms and financial institutions are beginning to see that they need one anotherto thrive.”1
Digital technology is giving rise to global, highly interconnected, and complex businessnetworks. Digital disruption holds great potential for increased engagement andcollaboration. In a global economy, Financial Institutions (FIs) will have to integrate theiroperations and collaborate seamlessly with partners or counterparties to reduce costs
while satisfying the high expectations of the digital customer.
Today’s volatile marketplace demands that FIs have best-in-class technology,
people, and processes to remain competitive and profitable. Leaders in the financial
services industry must increase efficiencies, maximize existing resources, andenable transparency across the financial supply chain to better manage liquidity andincrease profitability. This is critical in an increasingly global economy, as customers
and corporations expand their business activities across borders and time zones.
Maintaining efficient operations are further complicated by mergers and acquisitions,outmoded legacy systems, and global regulations.
The previous chapter examined how technology-based transformation is impacting thecustomer experience and engaging consumers in new ways. In this chapter, we’ll take alook at how digital technology is transforming the financial supply chain, specifically interms of how information is exchanged between counterparties to optimize FI supply
chain efficiencies. As integration and collaboration are key, we’ll examine how digitalbusiness integration capabilities are helping FIs cope with growing volumes of crossborder exchanges of capital, communications, and commerce.

The Financial Services Supply Chain
In the digital world, an enterprise’s linear value chain will be replaced by a dynamic
network of suppliers, partners, and customers. As financial supply chains morph
into dynamic systems, the digital supply chain will rely more on third parties. Digitaltechnology is making this integrated model possible by enabling specialized companies
to communicate, collaborate, and exchange information in real time. The end result1“ FinTech Rising: How to Create Synergies with Financial Institutions,” Yodlee Interactive, May 2015, https://www.brighttalk.
com/webcast/12339/155173 (accessed May 2015).

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T H E F I N A N C I A L S U P P LY C H A I N

is a tightly interconnected network of business partners collaborating to serve bothconsumers and corporations. By embracing emerging technologies, the digital supply
chain can deliver the improved efficiencies, transparency, and performance required tobetter manage change, complexity, and globalization.

FinanceCompanies

Regulators

Goods & Services
Providers

Brokers

Consumer

Capital Markets
Firms
AgentsFinancial
Intermediaries

Business

Insurance Companies
Banks

Suppliers

Providers

ChannelsCustomers

FIGURE 5.1: Financial Services Supply Chain

A financial supply chain sits on top of the physical supply chain and covers the flow oftransactions and communications between counterparties, whether they're buyers
or suppliers managing cash flow, working capital, or risk factors. Business partners
in financial services range from corporations to government agencies to payment
networks. Much like the physical supply chain for goods and services, the financial
supply chain is wide and deep with an amazing variety of financial counterparties andconnection points.
Based on the concept of the physical supply chain in trade business, the financial supply
chain focuses on the payment aspect of trade, from the creation of a purchase order toits settlement. Visibility into the movement of information impacts all the participantsin a supply chain to help them make informed decisions in a timely fashion. Synergies
can be created by combining information, collaborating around this information, andinfusing it with analytics for business insight.
FIs are striving to accelerate their supply chains and make them more transparent.
Streamlining and digitalizing payments are key to achieving both. Corporate treasurers
are focused on this because many traditional processes are manual. A good number oftransactions are still paper based, costly, and prone to human error. There are costs inevery aspect of the supply chain. Organizations want to digitalize trade information andautomate payment processes so they can focus on their business. Real-time payment
processing is becoming a requirement in today’s digital, on-demand marketplace.
Digitalization allows information to be transformed into real-time, actionable data.
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Real-time insight into the supply chain means that organizations can more efficiently
manage their trade transactions as they occur, giving them more opportunity tomove money around and make proactive business decisions. A greater visibility intotransactions benefits banks, for example, by enabling them to offer more-timely andbetter financing, or Just-In-Time financing.
Digital supply chain management helps FIs expand their reach, broadening theprocesses and services they offer. Having tight and frequent connections with theirpartners and customers gives them more opportunities to offer innovative solutions
that incorporate both supply chain financing and services. On a global level, thisinvolves integrating their processes into their clients’ and partners’ processes.
Globalization is driving FIs to contemplate digital business models to serve theircorporate clients and customers across their business networks.

A Global, Digital Economy
A global economy is putting strains on today’s supply chain as it struggles to assimilate
increasing amounts of cross-border exchanges of goods, commerce, and communications.
Digital technology makes it possible for the smallest company to participate in the
global economy—from anywhere in the world—enabling emerging economies to play amuch larger role in the global economy. Lower barriers to entry result in higher levels ofcompetition—from all parts of the globe.
In emerging economies, incomes are rising faster, and at a greater scale than at any point in history
Years to double per capita GDP1
Country

Year 1700

United Kingdom
United States
Germany
Japan

1800

1900

2000

Population
MillionGlobal consumption$ Trillion
64

9

154

10

53

28

65
33

South Korea

48
10

China

12

27
12

India

30
38

16

1,023
840

1 Time to increase per capita GDP in purchasing power parity (PPP) terms from $1,300 to $2,600.
SOURCE: Angus Maddison, The world economy: Historical statistics, OECD, 2003; Resource Revolution: Meeting theworld’s energy, materials, food, and water needs, McKinsey Global Institute, 2011; McKinsey Global Institute analysis

26

2010

34

2025
Developed markets
Emerging markets

FIGURE 5.2: Rapid Rise in Emerging Economies’ Incomes 22“ Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy,” McKinsey & Company, April
2014.

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Based on stiffer competition, businesses are focusing on their area of specialty andoutsourcing other operations. They are migrating from a vertically integrated model inwhich end-to-end supply chain activities are managed in-house to a highly specialized,
highly outsourced supply chain model. Organizations in every industry are outsourcing
everything from customer service, tax, accounting, and IT to strategic planning andmarketing. In fact, it’s difficult to name an industry that has not become highly specialized
and dependent on business partners for success.
With an increased number of businesses participating in the global economy, prosperity
around the world is rising, especially in emerging economies. As illustrated in Figure
5.2, it took 154 years for the U.K. to double their per capita Gross Domestic Product(GDP) during the Industrial Revolution, yet China and India have doubled their per
capita incomes in one-tenth of that time. 3 The new economy will herald in an additional
1.8 billion consumers in 2025, nearly all from emerging markets.4 As these populations
pursue economic interests and expand their operations internationally, cross-border
trade is putting additional strains on the financial supply chain.

International Expansion“The modernization of back-office systems is led by two drivers: expansion and innovation.”– Gartner
Over the last few decades, there has been an enormous explosion in cross-border
trade, and these volumes will grow. Between 1980 (1.8 trillion) and 2011 (17.2 trillion),
there was a tenfold increase in cross-border trade with volumes set to increase by2025 (64 trillion). Nearly 60 percent of this increase will take place between emerging
economies. 5 The challenge for financial supply chains will be to support growing volumesof cross-border transactions while maintaining performance, security, and compliancewith both local and international regulations.
Foreign banks are moving into new geographies and bringing with them a customercentric business model in place of the standard product-centric model. As their clients
increase their geographical footprints, FIs are expanding their operations internationally.
Over the past few years:
 The Bank of America (U.S.) and UBS (Switzerland) received banking licenses in

Brazil.
 JPMorgan Chase (U.S.) and Morgan Stanley (U.S.) won approval to form securities

joint ventures in China.
3“ Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy,” McKinsey & Company, April
2014.

4

Ibid.

5

Ibid.
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 ICBC, Bank of China, and the Agricultural Bank of China were approved by theFederal Reserve to expand their operations in the U.S.
 Citi (U.S.) and Standard Chartered (U.K.) are planning offices in Iraq to support

global power, oil, telecommunications, and construction clients.
As the volume of global transactions expands, the pace of exchange accelerates. In
the digital world, financial supply chains will need to facilitate huge increases in crossborder exchange and cope with soaring volumes of cross-border data, communications,and commerce between networks of suppliers. In response to the pressures brought onby globalization, end-to-end supply chain visibility is becoming a top priority. Effective
strategies for dealing with these pressures include integration and connectivity.
Growing global operations/complexity (e.g. longer leadtimes and lead-time variability, or need to gain visibility)

45%

Need to improve supply chain operational speed
and/or accuracy

43%

Increased stakeholder and customer demand for accuracy
and timeliness of inbound/outbound shipment events

30%

Business mandate to reduce supply chain execution costs

26%

Need to reduce, proactively allocate, or manage inventory
held at various stages in the supply chain

15%

Need to optimize the numbers of trading partners, suppliers,
carriers, logistics service providers (LSPs)

13%
0%

10%

20%

30%

40%

50%

FIGURE 5.3: Growing Global Operations – A Driver for Supply Chain Visibility 6

Back-office Modernization
While FIs continue to expand and explore new business growth, there continues tobe a focus on cost reduction across the industry. Cost reduction is a driver for backoffice modernization. Many FIs struggle to rationalize their back-office accounting
and payment systems after mergers and acquisitions. According to research, banksin Europe and North America are spending up to 90 percent of their IT budgets on
maintaining legacy systems.7 FIs are challenged to find the budget required to migrateclients from legacy systems and bring functionality up to par on end-state systems.
6

B ob Heaney, “Supply Chain Visibility. A Critical Strategy to Optimize Cost and Service,” Aberdeen Group, May 2013.

7

Phil Falato et al, “Backing up the Digital Front: Digitizing the Banking Back Office,” Capgemini Consulting, 2013, https://www.
capgemini.com/resource-file-access/resource/pdf/backing_up_the_digital_front25_11_0.pdf (accessed May 2015).

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Typical global FIs run on mainframe systems with tightly focused technology stacks
and siloed information—making them slow to respond to change. Legacy platforms
are expensive to upgrade and require special skill sets to maintain. Often, the more
outmoded they become, the more costly they are to manage. Integrating old systems
with new systems can add up to significant long-term investment and operating
expenses. Adopting a modern platform can result in process efficiencies that reduce IT
operating costs by 20 to 30 percent; development costs by 20 percent; application andinfrastructure costs by 25 percent; and service costs per policy by 30 percent. 8 Platformmodernization empowers FIs to respond quickly to make product changes or introduce
new ones, reducing time-to-market by as much as six months.9

Aging Back-office
Systems

Operational
EffectivenessOpen Source
Adoption

FIGURE 5.4: Back-office Modernization

In a highly competitive industry, the solution is to replace legacy systems withinvestments in digital technologies and channels. Digital strategies based on integration,
collaboration, and modernization will be most effective in balancing the mandates togrow the business and reduce costs. If FIs don't deliver on these strategies, there’s agood chance they’ll be disintermediated. Back-office modernization not only results inoperational efficiencies, it also enables greater collaboration between established FIs
and fintech startups through increased digital capabilities based on open source tools
and adoption.
Delivering superior responsiveness will depend on tight synchronization of data as wellas the movement of information, transactions, and funds between counterparties, basedon modernized systems and infrastructures. In the following feature, Banca Popolare
di Sondrio (SUISSE) SA has modernized their back office and implemented a content
management solution to achieve the levels of speed, efficiency, and agility required for
operational excellence.

8

Brian DeMaster, “The Digital Insurer: Reducing Costs and Time-To-Market Through Life Platform Modernization,” Accenture,
2013.

9

Ibid.

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Banca Popolare di Sondrio(SUISSE) SA
The solution allowed
BPS to migrate morethan ten million
documents andassociated metadata
at a rate of 300 to 400
documents per minute.

FIGURE 5.5: Banca Popolare di Sondrio (SUISSE) SA

Banca Popolare di Sondrio has a history dating back 140 years. This bank shaped
the economic development of the Italian region of Valtellina and then expanded into
Switzerland in 1991. Four years later BPS (SUISSE) SA was founded. The bank, governedby Swiss law and wholly owned by the parent company, is experiencing rapid growth andhas 22 operating units carrying out a broad range of diverse transactions.
Along with this rapid growth came an increase in the number of documents BPS (SUISSE)
SA had to manage. Their legacy archiving system was inflexible and unable to manage themetadata, authorization, security, and the processes associated with the growing volume
of documents. The Company needed a content management solution that could migrate
documents from the old system and integrate external information systems without
impacting usability or adoption by changing the existing interface.
A new content management system enabled BPS (SUISSE) SA to migrate more than ten
million documents and associated metadata at a rate of 300 to 400 documents per minute.
The solution’s central archive provides an overview of documents, allowing employees
to easily search for and retrieve documents. It integrates seamlessly across the bank’ssystems, enabling employees to access information using a familiar interface withouthindering adoption or productivity. Previously complicated tasks, such as customer
branch changes, are now automated and instant. Changes can be implemented quickly andcost-effectively, and third-party applications can be integrated to add value and agility.
The system supports strict monitoring and authorization applications for the handling ofhighly sensitive data to ensure compliance and security. Since implementing the solution,
BPS (SUISSE) SA has increased employee efficiency, automated and simplified processes
across the supply chain, and improved data security, all while keeping costs under control.
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Accelerating Processes to Hyper-Drive“Over 80 percent of retail banking executives report that increasing efficiency and cutting
costs are high impact drivers of IT investment.” – CEB Tower GroupTo meet the challenges of a digital economy, organizations must digitalize their businessprocesses. This goes beyond merely converting paper records to digital or automatingprocess steps. It requires close examination of key corporate processes, understanding
the needs of all stakeholders, determining new outcomes based on these needs, and thenworking back and leveraging digital technology to fundamentally re-invent processes.
In many FIs, current back-office operations are manually based and highly inefficient.
In fact, only 30 percent of banking executives feel that their processes and initiatives
are connected between departmental silos. An average mortgage application changes
hands manually 35 times before it is completed.10 When these manual processes are
combined with newly introduced regulations, FIs are producing massive amountsof paper. According to TD Bank in Canada, each employee produces 10,000 pages ofoffice paper each year. By their estimates, processing paper checks costs the industry
almost $100 million a year in transport alone.11 Back-end processes that are manual are
more prone to human error, which can be costly. Inefficiencies in the back office cannegatively impact customer satisfaction and the overall customer experience.
Many FIs lack the digitalized processes needed to lower costs associated with paperand storage, human error, and non-compliance. Most believe their current operational
processes are not adaptable to new demands. They are limited by their current backoffice IT systems in their abilities to introduce new products and services and acquire
new customers. In the wake of increasing compliance requirements, shrinking margins,and evolving customer demands, FIs can expect the digitalization of processes to be amajor lever in improving productivity and reducing costs.
Ideally, FIs should digitalize core business processes from end to end, in their entirety.
The benefits of digitizing information-intensive processes are numerous. Costs canbe reduced by up to 90 percent and turnaround times improved by several orders ofmagnitude.12 Errors can be reduced. New channels and new routes to the customer canbe leveraged. Replacing manual, paper-based processes with digitalized processes anddocuments enables FIs to collect data to better understand process performance, costs,
and risk factors. Real-time reports and dashboards can alert managers to address
10

Phil Falato et al, “Backing up the Digital Front: Digitizing the Banking Back Office,” Capgemini Consulting, 2013, https://www.
capgemini.com/resource-file-access/resource/pdf/backing_up_the_digital_front25_11_0.pdf (accessed May 2015).

11J ohn Armstrong, “Banking in 2023: what’s a branch?” The Globe and Mail, April 30, 2013, http://www.theglobeandmail.com/
report-on-business/economy/canada-competes/banking-in-2023-whats-a-branch/article11644689/ (accessed May 2015).

12

S hahar Markovitch and Paul Willmott, “Accelerating the Digitalization of Business Processes,” McKinsey & Company, May
2014.

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problems before they become critical. Over and above these benefits, digital technology
helps to build more streamlined processes to improve business efficiency, as illustrated
in the follow feature about Mercer.

Increasing Business Agility
In order to compete, FIs need to maintain superior levels of process excellence, while
rapidly responding to the changing needs of their market. Process changes that takemonths to implement are no longer acceptable or viable. Creating processes that areagile and flexible is a strategic priority. Digital technologies such as Smart Process
Applications (SPAs) and Dynamic Case Management (DCM) help FIs automate key
processes such as client onboarding, client reporting, and loan origination and servicing.

Client Onboarding
Client onboarding, for example, is traditionally a manual, paper-based process that often
leads to duplicate data entries, lack of management visibility into the entire process, anddisconnected customer service. The paperwork associated with account opening canbe rejected, which incurs costs associated with time and resources. In a market where
products are perceived as comparable, the provider with the highest level of service andmost effective onboarding process will win more new clients and gain competitive edge.
By digitalizing onboarding processes, banks, credit unions, and other FIs can ensure theconsistent and accurate capture and processing of application forms, whether received
on paper, online, through a branch, or a call center. Automating the process helps toenforce confidentiality of information and compliance with regulations, while giving FIs acomplete view of the customer, from their source documents to third-party information,account profile, and application status.

Client Reporting
In the financial services industry, asset management, money management, and mutual
funds are very competitive businesses. Differentiation is hard to establish. Investment
firms are evaluated by their ability to deliver the client’s results in a format that theclient dictates which can often be time-consuming, manual, and costly. By automating
the client reporting process and re-deploying resources, wealth and asset managers canincrease operational efficiency, make time to engage effectively with clients, enhanceclient communications, and strengthen their brand for competitive advantage. Using
automation, FIs can deliver more accurate reports in real time, based on market changes.
Automated services are available through a self-service portal that is easily accessed bycustomers and managed by FIs. This allows customers to choose their preferred channelof information delivery and format for communications and helps FIs to deliver moreaccurate information and satisfying customer experiences.

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Mercer
The integration of BPM
into existing systems
has allowed Mercer
to rationalize key
processes and increase
overall businessefficiency and visibility.

FIGURE 5.6: Mercer

Mercer is a global consulting leader in talent, health, retirement, and investments. Mercer
helps clients around the world advance the health, wealth and performance of their mostvital asset—their people. The Company is spread across 43 countries and has more than
20,000 employees.
Mercer’s Benefits Administration business employs a consultative, outcomes-based
approach to benefits administration to deliver unparalleled guidance, transparency
and innovation to increase the effectiveness of their clients' health benefits andretirement programs. Investing in leading technology is a large part of Mercer’s approachto strengthen the impact and outcomes for clients and plan participants. Their technology
investments—driven by the ever-changing marketplace, their own development road map,and client feedback—ensure the delivery of robust, scalable administrative solutions.
One such example is Mercer’s investment in a BPM (Business Process Management)
platform to streamline administration processes such as document management andhealth plan carrier file transmission. With BPM integrated into their existing systems
environment, Mercer has rationalized key processes and increased overall businessefficiency and visibility.

107CHAPTER 5

Loan Origination
Many FIs centralize their operations around loans and credit. Bank and financial
institutions have a fluctuating volume of consumer lending and are facing a highly
competitive market and rising costs. On average, it takes 30 to 45 days and $2,250
to $3,400 to process a mortgage loan, for example, from the point of sale through toclosing. FIs are under constant pressure to shorten loan processing cycles and reducemanual exception processing. Automation provides an efficient and agile platform fortheir disparate lending applications.

FIGURE 5.7: Digitalizing Loans Processing

Digitalized loan processing gives banks, lenders, and underwriters an efficient andpaperless loan service. A case management and process automation platform can beused to digitalize all of the activities involved in loan processing, from loan application
through to servicing set up and loan sale. With manual steps removed, the costs
associated with time, resources, and errors are all but eliminated, and efficiency and loan
closure rates are improved. Digitalizing the process remodels back-office operations
as the system can intelligently route the required pieces of information in a mortgage
process, for example, to appropriate parties (branch associates, external agents,
back-office processors, loan pricing and approval participants and supervisors) for
approvals. Dashboards and real-time metrics give FIs visibility into the entire process,from end to end, meaning they have tighter governance and control over the processof loan applications and comply with guidelines like Know Your Customer (KYC). By
providing highly efficient document capture, reducing the complexity of application
and assessments, and removing the need for time-consuming compliance training, thesolution speeds cycle time and increases productivity.
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FIGURE 5.8: Real-time Visibility into Metrics

Automating the loan origination process helps FIs accelerate the process for faster timeto-revenue through the clear management and visibility into tracking results, status,and overall performance. Rapid and accurate responses creates customer goodwill andenhances experience. While costs are reduced through the elimination of paper-based,manual tasks that include handling, storage, filing, and routing, BPM helps FIs meet
rapidly evolving government regulations and compliance policies with highly adaptableprocess management.
For insurers, in a market where profits are declining based on lower interest rates andfewer agents, insurance companies can improve both the client and agent experiencethrough automated claims processing. Digitalizing processes results in greater
economies of scale, as fewer people can handle more claims. On the underwriting side,
automating new business and underwriting processes drives operational improvements
for significant bottom-line impact. Automated processing systems help insurers gain abetter understanding of the risks involved in coverage. Digitalized underwriting helps
insurance companies more accurately select, plan for, and price policies based on risk,
reducing costly rework and resulting in more satisfied clients and agents.

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FIGURE 5.9: Automating the Underwriting Process

Automating processes is critical to ensuring financial supply chain efficiencies andeffectiveness. Digital leaders are more likely to incorporate automation tools tosynchronize and manage information and financial flows across the extended global
supply chain.13 Integration and connectivity through back-office automation are key todigital transformation, bringing processes, people, and information together to function
more efficiently. This also allows for seamless connections between counterparties.
The speed and agility of supply chain operations will continue to be enhanced by
BPM applications that synchronize data and exchange supply chain transactions withincreased speed, accuracy, and security.

The Information Supply Chain
To effectively orchestrate today’s highly outsourced and globally distributed supply
chain, FIs must tightly coordinate the flow of communications and commerce across their
entire business network. B2B integration is a set of technologies that facilitate the realtime, automated transfer of information, money, and goods and services, creating an“information supply chain” for the enterprise. It empowers a tightly integrated networkof employees, suppliers, and partners to exchange communications and commerce inways that are rapid and accurate and make decisions that are timely and intelligent.
13

B ob Heaney, “Supply Chain Visibility. A Critical Strategy to Optimize Cost and Service,” Aberdeen Group, May 2013.

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Simplifying Connectivity for Financial Counterparties
Revenue Growth

Customer
Satisfaction

Innovation

Cost Control

ComplianceBusiness Goals
Automotive

Government

RequestAerospace
Invoice

Transportation
ReportOrder
SMS

PictureFinancial
Institution

Healthcare

Manufacturing

Shipping

Contract
Fax

Email

Receipt

Scan

Information Exchange
Challenges

Energy & Utility

Fragmented

Not Secure

RetailNot Integrated

RetailExpensive

Not Compliant

FIGURE 5.10: Business-to-Business Integration

B2B integration streamlines electronic transactions between business partners,
giving FIs access to their financial counterparties with managed, hosted services andtransactional solutions to automate and simplify connectivity. With the complexity andfrequency of business transactions, B2B integration involves a heightened degree of
coordination, data synchronization, and transaction automation.
Many different kinds of financial transactions flow between FIs and their clients,
whether they’re commercial banks, life and health insurance firms, property, financial
data services firms, or managed care and securities firms. Typical financial industry
transactions include payments and cash management, securities exchanges, and tradeand foreign exchanges, as depicted in figure 5.11.
A number of new regulations and requirements are impacting the way financial services
firms exchange transactional information. Some examples include the Payment Card
Industry; Data Security Standard (PCI-DSS) in the credit card industry, which protects
credit card holder personal information, and the Gramm–Leach–Bliley Act (GLBA) in thebanking sector, which protects the privacy of customers. Complying with these requires
FIs to adopt new standards of communication such as eXtensible Business Reporting
Language (XBRL) for Securities reporting, as well as methods for secure informationexchange such as Electronic Data Interchange (EDI).

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Commercial
ClientPayment and Cash Management

Bank

Broker

Securities

Securities
Firm

Bank

Trade and Foreign Exchange

Bank

FIGURE 5.11: Typical Financial Industry Transactions

To further complicate information exchange, global expansion has introduced over
100 different e-commerce file formats and communication standards currently in
use throughout different industry sectors and countries around the world. Payments
within the Single European Payments Area (SEPA), for instance, must comply with theEuropean Payment Council’s SEPA directive requiring provision and maintenance ofInternational Bank Account Numbers (IBAN) and SWIFT Bank Identifier Codes (BIC)with other bank details in vendor and customer records. In some countries, to leverage
the benefits of low-cost national clearing systems, payment data must be in the local
language, such as Chinese, requiring specific character sets to process payments. Taken
together, these and other challenges require the highest quality connectivity andintegration solutions to drive complex accounting, financial supply chain, treasury, andmanagerial accounting functions.
Improving communications and connections with third parties is critical; so critical, in
fact, that it has been identified as a leading priority for CEOs and CFOs and the top
priority for treasurers. One of the ways that FIs can achieve this goal is through B2B
integration services combined with secure information exchange.
CEOs
N=62

40%

22% 38%18%
Strengthening
liquidity

CFOs
N=105

Treasurers
N=81

19% 32%23%
Improving communication orconnection with theinformation systems of third
parties (e.g., suppliers, funding
institutions, customers)

14%

28%

15%

13%

12%

Optimizing internalfunding across different
countries

Reinvesting cash reserves inthe business

Source: SAP/CFO Research Global Survey of
Corporate, Finance, and Treasury Executives. 2013

FIGURE 5.12: Improving Connectivity Is a Priority for CEOs, CFOs, and Treasurers112

T H E F I N A N C I A L S U P P LY C H A I N

Secure Information Exchange—in the Cloud
Corporate treasury departments often juggle multiple priorities: maintaining liquidity,
optimizing cash flow, securing finance, controlling risk, and managing bank relationships.
To manage these priorities effectively requires access to complete, timely, andaccurate financial data from financial partners. Payment instructions, lockbox reports,
intraday transaction files, foreign exchange trades, and securities confirmations are all
essential to monitor and manage an organization’s financial health. Corporate treasury
departments strive to automate and integrate the data they need regarding cash
positions, interest rates, payables, receivables, and foreign exchange rates. Fortunately,
there are many different options available to choose from in order to connect tofinancial counterparties, including online cash management portals, direct host-to-hostconnectivity via various security and communications protocols like EDI networks andfax, and the industry standard, SWIFT network connectivity.
Faxing, for example, is ubiquitous in financial services. Many organizations still use
traditional fax machines, which means there are often hundreds of fax machines spreadout across an enterprise. A reliance on traditional fax machines incurs high document
distribution costs, can present compliance issues, and doesn’t integrate easily with otherapplications, such as email, or processes. Faxes can be delivered to the wrong person or
lost. There are the obvious associated costs with maintaining individual fax machineswith paper, toner, and separate phone lines. Finally, standalone fax machines do not
maintain an audit trail that tracks critical details or provide protection for sensitive
data, both necessary in a highly regulated industry.
What are your biggest issues?

The challenge of integrating fax into today’s business process

49%

Integrating fax into
workflow process

39%

Integrating fax data
into business systems

33%

31%

Security

Reducing IT costs

OTHER

20%

Compliance19%

Increasing response time

12%
Other

Source: OpenText Survey Report, Descember 2012, Spiceworks Voice-of-IT (www.spiceworks.com/voice-of-it).

FIGURE 5.13: Integrating Fax-based Information with Processes is a Challenge113CHAPTER 5

From electronic faxes and cloud services to large managed file transfers—these
services generate truly massive amounts of data and are often tied to other process orapplications with very specific collection parameters. As the ways to connect increase,so do challenges for partners in the financial supply chain. The resources, technology,
and time dedicated to each service can cost anywhere from $15,000 to $35,000 per
channel. A lack of standards leads to inflexible file format options and an inability tointegrate information with Enterprise Resource Planning (ERP) systems. Reconciliation
challenges from disparate systems result in limited visibility into cash and payment
status. Organizations experience performance and capacity constraints and theinability to switch or add banking partners easily. Finally, FTP solutions, faxes, andlarge email attachments do not provide the level of data security and compliance thatFIs require.
Commercial banks, payment processers, treasury departments, and global custodiansneed flexible and agile B2B integration capabilities to ensure that information issecurely and compliantly exchanged. Automated solutions for high-volume data transfer
between banks and their corporate clients give FIs the flexibility they need to exchange
information in preferred file formats, network protocols, and security standards.

SWIFT Service Bureau
Direct Connectivity

Cloud-based
Integration Services
PayablesReceivables
Balances and Transactions

SWIFT Connectivity

Electronic Banking Internet
Communication Standard(EBICS) Service Bureau
EBICS Connectivity

FIGURE 5.14: Eliminating Proprietary Connections with B2B, Cloud-based Integration

Often initiated by the implementation of shared service centers and rationalization ofbanking relationships, improved connectivity generates significant benefits. Information
can be aggregated more quickly and frequently, giving organizations greater treasury
visibility and control over their global liquidity. Cash flow can be optimized as cash
conversion cycles, automated cash applications, and electronic invoices are streamlined.

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T H E F I N A N C I A L S U P P LY C H A I N

Standardized processes simplify fee structures, eliminate redundant services, andreduce complexity. Improved cash flow and streamlined payments and collections helps
to increase working capital efficiency. And finally, reduced manual reconciliation anddata aggregation improves audit compliance.
With integrated information exchange solutions, FIs can exchange critical data ortransactions electronically. Through secure fax, email, and managed file transfers,
they can safely move information between organizations, regardless of which businesssystem it resides in. Transactions can be completed in ways that are fast and secure.
Data integrity and security are built in to protect against threats of internal information
leaks and cyberattack. Information exchange empowers FIs to accelerate and control
how information is delivered across the business network.

Bringing It All Together
Meeting Your Clients’ Needs Across Delivery Channels

Electronic Format(e.g., EDI, SWIFT, SAP)
Secure Internet
Connection
Bank

Remittance
AdviceSecure EmailFax
FIGURE 5.15: Secure Information Exchange

B2B integration connects FIs and their corporate clients, allowing them to exchange
critical financial data in a secure, reliable, and cloud-based environment. Throughintegration with existing systems, organizations all along the financial supply chain can
increase straight-through-processing and visibility into their financial transactions.
Time-to-market is accelerated through the efficient onboarding of new suppliers inemerging markets and mapping of data such as purchase orders and commercial invoices.
Business Intelligence (BI) integration gives FIs broader capabilities to meet client needs,
lowers barriers to client connectivity, and speeds time-to-revenue, as illustrated in thefollowing feature about Symcor.

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Symcor"With single fax solution, we’reable to save over $6,000 per
month in maintenance andsupport fees and over $77,000
annually in long-distancecharges. With less technology
to refresh, we anticipate an
additional $230,000 in savings
over five years."
TED NEAL, SENIOR MANAGER, WINDOWSSERVERS, SYMCOR
FIGURE 5.16: Symcor

Symcor is one of Canada’s leading financial processing services providers, supporting
major banks as well as retail and telecommunications companies. With over 3,000
employees in offices and operational facilities from coast to coast, Symcor delivers costeffective outsourcing solutions for financial processing, including a diverse portfolio of
integrated solutions in item processing, statement processing and production, and cash
management services.
Despite dramatic shifts in communication technology, Symcor still relies on faxing for
document delivery both internally and externally to organizations around the world. The
reason is simple: as part of a comprehensive information exchange strategy, fax provides
a secure and reliable way to exchange business critical information. Security, compliance,and cost control were top of mind when Symcor sought out the deployment of a network
fax server solution. These goals continue to drive the evolution of Symcor’s fax solution
strategy, as it strives to reduce costs and boost security while centralizing and integrating
its fax technology.
Symcor replaced multiple legacy fax technologies with a single enterprise solution that
supports services across all lines of business, allowing the Company to increase efficiency
and reduce expenses. Using existing telephone/data lines, Symcor has seen an immediate
return on investment—giving customers a higher level of service with high availability anddisaster recovery. The solution has saved the Company $8,000 per month in support andmaintenance. Symcor has evolved the solution to support Fax over IP (FoIP) to tap into
the enormous amounts of unused voice network bandwidth. The Company channeled theFoIP services over its voice network, with an estimated savings of over $100,000 annually.
Symcor anticipates an additional $300,000 in savings every five years with less server
technology to refresh. With the high-performing solution, Symcor delivers exceptional
service and rarely has to open a service ticket, much to the delight of its clients.
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Collaboration in the Cloud
In order to grow and diversify, FIs will need to embrace a new kind of collaboration—with
fintech startups, tech companies, counterparties, suppliers, and other FIs—enabled bysupply chain management. In the growing financial services ecosystem, fintech startups
will need access to financial services systems that banks and other large, traditional FIs
offer. This will become increasingly important as the smaller startups face increasing
regulatory scrutiny. Banks and established FIs are experienced in dealing with intense
regulatory pressures. They also house volumes of consumer data that many startups
need access to.
On the flipside, startups have the focus and agility that permits them to move fast in
bringing new products and services to market, unencumbered by dated legacy systems.
They can leverage disruptive technologies for much faster time-to-market and revenues.
And many are not limited by regulatory compliance when they use an established FI to
manage transactions or commerce on the back end.

Banks
Customers

Global Supply
ChainsXML

FLAT

Regulatory

INDUSTRY
NACHA

EDI

Information
Exchange

PROPRIETARY

Corporations

PROPRIETARYPROPRIETARYSWIFT

Global Dashboard

Banks

Bank Systems

FIGURE 5.17: A Cloud-based Integration and Collaboration Platform

Established and emerging FIs are starting to collaborate in areas of mobile payments,
small business lending and services, and B2B commerce. Startups have a broader
mindset that can help FIs transform their operations and products and services to awider consumer base. FIs can partner with startups to help provide the services, data,
consumer base, and best practices that fintechs lack. Effective collaboration across thefinancial supply chain requires FIs and their clients to synchronize their master data,
gain visibility into the operations of other partners, and coordinate their efforts to fulfill
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transactions. While these activities have historically occurred via B2B integration on
private EDI networks, many companies are now shifting their operations to the Cloud.
Cloud-based platforms for B2B integration are ideally suited to facilitate collaboration
between multiple partners. With a cloud-based model, each partner can place relevant,internal data outside their firewall where it can be exposed for external parties to
consume. Collaboration in the Cloud ensures all partners have access to a common
source of master data. They can be confident that it’s more accurate and secure.
Using strategic partners allows FIs to focus on the core competencies they provide for
their clients, while leaving functions like onboarding, connectivity management, anddata integration to a partner who specializes in these areas. For example, in a dataintensive industry such as securities, being an expert at managing client onboarding,daily exchanges of critical data files, and online communities are a requirement, but
not a core competency. Outsourcing to the Cloud presents FIs with a transformational
opportunity to widen the scope of business process re-engineering and technology
initiatives. It helps overcome resourcing challenges.
Firms that are already outsourcing administrative processes are considering thesame approach for extending this to include other non-core competencies such as
client onboarding and connectivity, back-office and data integration, and post-tradetransaction processing. Outsourcing these functions can drive efficiency and growth
while meeting the needs of clients. With firms needing to invest in strategic capabilities
and comply with regulations, outsourcing non-core functions can be a powerful tool inglobal expansion that speeds innovation and increases flexibility in developing businessapplications to meet client needs.
There are many benefits provided by partnering and deploying key functions to the
Cloud, especially when firms have limited IT resources. Software-as-a-Service (SaaS)
enables FIs to move from capital investment to an operational cost model, while the
Cloud supports the development environment.14 The result is lower total cost ofownership and investment in a more flexible platform moving forward. These arejust some of the reasons why business is shifting decidedly to the Cloud. In a digital
future, half of all large enterprises will adopt a hybrid cloud computing model with datastored partially on cloud servers and partially onsite. Supply chains will follow suit,increasing their reliance on a cloud computing platform for B2B integration and supply
chain collaboration. Integrating both local and outsourced operations into a single,
shared connectivity structure facilitates international expansion and cross-geographycollaboration practices for consistency, compliance, and accuracy. In the following
feature, KeyBank is using cloud-based managed services to digitalize commercial
transactions and optimize transparency along its supply chain.
14

Brian DeMaster, “The Digital Insurer: Reducing Costs and Time-To-Market Through Life Platform Modernization,” Accenture,
2013.

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TRANSFORMATION IN ACTION

KeyBank
Headquartered in Cleveland, Ohio, KeyBank* is one of the nation’slargest bank-based financial services companies, with assets ofapproximately $95 billion. Key companies provide investment
management, retail and commercial banking, consumer finance, andinvestment banking products and services to individuals and companies
throughout the U.S. and, for certain businesses, internationally.
With nearly 14,000 employees, KeyBank provides banking services
and products to two million retail, small business, corporate andinvestment clients.

FIGURE 5.18: KeyBank

John Sciano, VP and Sr. Channels Product Manager on KeyBank’s Enterprise Commercial
Payments team, is responsible for managing and developing online delivery channel products for
KeyBank’s treasury management clients. In the following excerpts from an interview, Mr. Sciano
describes how digital technologies are helping KeyBank to deliver new and competitive products
and services to clients and create a workplace that appeals to Millennials.
* T he information and recommendations contained herein is compiled from sources deemed reliable but is not represented to be accurate
or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, orlegal advice.
KeyBank is Member FDIC. ©2015. KeyCorp. CFMA #151218-23914

119

TRANSFORMATION IN ACTION“Like most banks, we have cash management
products and services that have been in themarket for years. Services like lockboxes,
control disbursement accounts, and accountreconciliation are fairly developed, and mostcompetitors offer these products and services.
But, we’ve entered the digital age, and ourclients want to be able to access our products
and services using digital channels. So, overthe past few years, we’ve undertaken someinnovative and transformative projects todeliver the treasury management products andservices our clients want.

Security is a daily battle for everyone, especiallywhen it comes to safe use of online channels.
We continually offer training and education to
help clients minimize their risk and keep theirbusinesses protected. We also help our clientsby providing multi-factor authentication forhigher risk modules such as ACH and wiretransfers—and now our new File Transfer
module. This extra layer of security helps
us protect our clients as they transact with
KeyBank.
Treasury professionals want to be able to do
things better, faster, and cheaper. Our dedicatedpayments advisors have expertise across a
broad range of industries, which ensures thatthey understand our clients’ specific needs.
We’re constantly looking at our data to identify
and uncover trends about what our clients are
doing so we can help them work more efficiently.
Our goal is to help our clients run theirbusinesses better every day.

Disruptive digital technologies like the Cloudand mobile devices have all played a significant
role in our transformative journey, allowing us
to deliver many of our products via web andmobile channels.
Every day, KeyBank supports hundreds ofincoming and outgoing file exchanges for our
corporate clients. About 75 percent of our filetransfers are processed through the Trading
Grid in the Cloud. Before we implemented B2B
integration technologies (like Managed Services
and the Trading Grid), clients were limited interms of what file formats they could sendor receive using our file transfer services. We
didn’t have a way to handle unsupported files,
which meant the client had to spend time andresources figuring out how to format the files
themselves, involving their IT staff, or hiring a
consultant.
By partnering with a third-party, we’re able
to offer a synchronized, streamlined, andstandardized Managed File Transfer (MFT)
service. One of the biggest benefits we’verealized by partnering is that we now have theflexibility to handle additional client file formats
and transmission protocols that were previously
not supported. This is really beneficial for clientsthat don’t use standard file transfer formats
or want to use a more complex transmission
protocol. Partnering has allowed us to go a step
above and deliver a service that is convenientand secure.

Mobility is critical to our clients. We’ve
developed digital channels that have a mobile
component to them. Clients can easily retrieve
basic information such as account balancesor recent transactions. They can also approvewires and ACH payments. We know clientsare increasingly using their mobile devices to
conduct business. So, we incorporate this need
into our product planning process. We have anumber of mobile solutions in the queue thatwill allow our clients to get updates, alerts,
provide authorizations, etc.
Millennials are driving a lot of this change.
We’re seeing many new, young faces in theworkplace. KeyBank’s workforce is very diverse,
and we pride ourselves on that. We’re findingthat Millennials have a different approach towork. They want to be able to work from home,or remotely. We’re accommodating thesedifferent work styles by providing mobile work
stations. So, if an employee works from homefull time, but has to come in for a meeting, wehave cubicles set up specifically for them. We’reretrofitting many of our facilities to include

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TRANSFORMATION IN ACTION

these mobile work stations because we know
the flexibility to work remotely or from home isnear and dear to Millennials.
Technology is disrupting how we do business.
We continue to bring new and exciting treasury
management solutions to the table for ourclients. We are acutely aware of what’s goingon in the industry. Simply talking to our clientsis one of the best ways we find out about their
day-to-day challenges. Clients really appreciate
when we take a consultative approach andask them what they think, or what they need—
especially on a one-on-one basis. Our sales
force maintains an interactive dialogue withour clients, and we get some really great ideas
from them. Ideas that form the foundation forchange.
Communication plays an important role inmanaging change. For example, when weconverted from the previous MFT service to thenew one, we reached out to every single client toprovide new credentials, URLs, parameters, etc.
We did the same thing when we transferred ourclients over from our prior file transfer module
to the new one. That was a big undertaking. So,
we did it in phases. We sent letters and emails,
and provided training for them. Then, over thecourse of a weekend, we flipped the switch andwent live with the new module. It was a lot of
work—a lot of communicating with clients—but
it was extremely successful. Because the newmodule was intuitive, the transition was virtually
seamless and we had very few questions. Even
though it had a new look and feel, it was familiar
to clients. So, they were very comfortable with it
and receptive to it. We couldn’t have done thatwithout a partner. Partnering allowed us to get
the solution to market faster, and for a much
lower cost. Communicating to clients ensured
the successful adoption of the solution.”

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A Rich Network of Value
Recent innovations in supply chain management have expanded B2B integration
networks with value chain support services in a managed service business environment.
Many organizations are opting for an outsourced, SaaS, or Platform-as-a-Service (PaaS)
approach for their B2B integration activities to reduce the complexities of connectingwith partners, support multiple information exchange protocols, and deal withmessaging and security standards.
As organizations depend on third parties to oversee all their day-to-day transactions,
the B2B integration network is being layered with more value. Solutions for BPM,Enterprise Information Management (EIM), and big data analytics add value to networks.
As information from faxes, email, SMS, and EDI transactions flows across the network,
B2B integration helps to broaden the B2B network that connects transactions, processcollaboration, payments, information, and business intelligence.15
Incredible value can be derived by collecting, managing, and analyzing informationfrom various business applications across the network. As a platform for the digitalenterprise, EIM can provide new intelligence for a multitude of purposes beyond
optimizing the supply chain. Integrating the following technologies controls the flow of
information across the enterprise with partners, suppliers, and customers each adding
a layer of value to the ecosystem:
1.1 EIM - Both unstructured and structured information flows across the extended
enterprise. EIM consolidates all information for a single version of the truth,
uniting front- and back-office ERP systems to manage information transparently
and securely throughout its lifecycle.
2.2 B2B Integration - Companies need to connect to a variety of external partners
using many different communication protocols and document standards. B2B
integration and information exchange capabilities can be applied to manage andsecure data exchanged between trading partners.
3.3 Internet of Things (IoT) Networks - As devices, machines, and sensors connect
to the Internet, they will need to exchange big data and information withorganizations across business networks and supply chains.
4.4 Internal Systems - In order to integrate information from IoT devices into
back-end enterprise systems, information will need to be exchanged throughdedicated Application Programming Interfaces (APIs). Many APIs are currently
in development, and in the near future, they will be available for integration with
B2B, ERP, and other systems.
15

B ob Ferrari, “GXS-The Hidden Gem in B2B Information Services and Application Support,” The Ferrari Consulting andResearch Group LLC and the Supply Chain Matters Blog, June 14, 2012, http://www.theferrarigroup.com/supply-chainmatters/2012/06/14/gxs-the-hidden-gem-in-b2b-information-services-and-application-support/ (accessed July 2012).

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The combined end result is a comprehensive and automated platform for the
management and exchange of financial supply chain information. The platform enables
partners in a business network to produce, access, and consume information with asecure and managed approach. With EIM and B2B Integration, the financial supply chain
is empowered to connect, collaborate, and re-invent itself to lead in 2020.

The Digital Supply Chain: A Strategic Imperative
In the digital world, all organizations will depend on supply chain operations to deliver
superior customer experience. While the digital age provides exciting ways of engaging
customers and opportunities for revenue growth, it also requires FIs to radically changeor, in many cases, completely overhaul their supply chain processes. Their operations
need to scale, shift, and contract depending on business and market requirements. New
channels need to be leveraged and new markets serviced.
Increased flexibility and agility is the key to success, and FIs are achieving thisby digitalizing core business processes and adopting emerging technologies forincreased flexibility, cost savings, and improved performance. Today’s leading financialorganizations are assembling service processes rapidly with SPAs, automating service
processes with DCM, and delivering 24/7 engagement with self-service capabilities.
B2B integration is providing sophisticated synchronization of data and transactions
for the automated exchange of transactions, commerce, and information. Analytics aredelivering incredible insights for supply chain optimization. The IoT is enhancing therichness of information by creating value chains that are intelligent and instrumented.
Managing all of this information across a collaborative platform is the key to supply
chain optimization and B2B integration in efficient, secure, and compliant ways.
To meet the challenges inherent in the financial supply chain, FIs will depend on digitaltechnology for increased global collaboration, seamless communication, real-timeinsights, and action. With globalization and expansion comes new requirements tocomply. The challenges of information risk, governance, and compliance in the financial
services industry are examined in the next chapter.

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DIGITAL GOVERNANCE
AND COMPLIANCE

6

CHAPTER 6

C HAPTER 6

Digital Governance and Compliance“By as early as 2016, 20 percent of CIOs in regulated industries will lose their jobs for failingto implement the discipline of information governance successfully.”1
Today’s Financial Institutions (FIs) are operating in a new environment. Since thefinancial crisis of 2008, banks and investment firms have watched as the regulatory
reform process moves from policy to implementation. Global regulatory reforms
have banks, brokers, and investment managers struggling to comply with a myriad offinancial regulatory challenges and market developments. These challenges are further
complicated by increasing transaction volumes, mergers and acquisitions, emerging
payment markets, fintech products and services, the constant pressure to strengthenbalance sheets, and mandatory reporting requirements.

COMPLIANCE

nic
mm
u
Co

RISK MANAGEMENT

ng
ori

nit

ati

Mo

on

s

As FIs adjust to the new regulatory landscape, they are taking proactive steps to reevaluate the implications of reforms and thinking more broadly about how this impacts
their business. In an industry where the financial, legal, and reputational consequencesof non-compliance can be substantial, FIs do not have the luxury to test the effectivenessof existing information Governance, Risk Management, and Compliance (GRC) programs.
New demands to stay compliant and competitive will require enhanced business models
for better information management and connectivity.

GOVERNANCE

Extended Enterprise and Supply Network
FIGURE 6.1: EIM - An Effective Platform for GRC 2
1

Bill O’Kane and Andrew White, et al., “Predicts 2012: Information Governance and MDM Programs Gain Traction,” Gartner
Inc., http://www.gartner.com/id=1856616 (accessed July 2013).

2

 melia Ho, “Compliance Management: A Holistic Approach,” ISACA Journal, 2009, http://www.isaca.org/Journal/Aarchives/2009/Volume-5/Documents/jpdf0905-complinace-mgt.pdf (accessed June 2015).

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Strategies for managing GRC will help FIs maximize the value of their information while
minimizing risk. For many firms, finding this balance will be critical for survival. This
chapter explores the current regulatory landscape in the industry, requirements for
effective information governance and risk management, and how Enterprise Information
Management (EIM) provides a sustainable platform for GRC, enabling FIs to put policies
and controls in place to address compliance issues while making critical information
available to improve performance and deliver competitive advantage.

A Complex Governance LandscapeIn the wake of the 2008 financial crisis, regulatory agencies, investors, legislators, andthe general public are more focused on FI practices and compliance performance thanever before.
The financial services industry faces unprecedented regulatory challenges in the
coming years. Many FIs are struggling to improve their ability to respond to regulatorycompliance as they seek to recover income lost from traditional revenue streams. Whilethey strive to meet the demand for customer-centric services, FIs must respond to
regulatory scrutiny, provide accurate reporting on risk exposure, and standardize anddigitalize compliance processes.
In today's global marketplace, the regulatory landscape for FIs is complex, especially forthe larger, global firms. FIs are subject to industry-specific regulations and standards
as well as regional or national regulations. According to these regulations, FIs are held
accountable for their actions and must be able to access years of historical data in
response to requests for information at any given time.
In the U.S., the Dodd-Frank Wall Street Reform and Consumer Protection Act, morecommonly referred to as the Dodd-Frank Act, has brought the most significant changes
to financial regulation in U.S. history since the Great Depression. Its passing has
impacted both the financial regulatory environment and every aspect of the country’s
financial services industry. It requires FIs to maintain records for at least five years.
Like Dodd-Frank, Basel guidelines (banking laws and regulations issued by the BaselCommittee on Banking Supervision) mandate the retention of transaction data forthree to five years. Sarbanes-Oxley requires firms to maintain audit work papers andrequired information for at least seven years. The U.S. Congress enacted the Fair andAccurate Credit Transactions Act (FACTA) to make it more difficult for U.S. persons tohold financial assets outside the U.S., and all complying firms must be able to search
their records and report assets and identities to the U.S. Treasury. To comply with theseregulations, corporate records must be properly maintained and available on demand.

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More than 100,000 rules and regulations and growing
North America

Europe & Asia

Global• Dodd-Frank• PCI-DSS• PIPEDA• SEC Rule 17a-4• Sarbanes-Oxley• BASEL III (with BASEL II)
Capital Accord• Financial Services Authority• U.K. Bribery Act• BSI PD5000• Mobile Payments Security
in Europe• UAE Wallet• PSD II
• Financial Inclusion• SEPA/e-SEPA• SEPA for Cards• NPCI• FACTA• BASEL III Capital Norms• BASEL and Intraday
Liquidity Norms• Real-Time Retail Payments• Anti-money laundering(AML)/Anti-terrorism
financing (ATF)• ISO 20022 Standards inPayments• CPSS-IOSCOFIGURE 6.2: Global and Regional Regulatory Pressures 3

Canadian banks and investment services are facing more stringent regulations thatcame into effect after the 2008 financial crisis. One example is Basel III, introduced asa global standard to introduce more requirements on bank liquidity and leverage. Whilethese regulations were intended to counter the failures of U.S. and European banks,
they are impacting Canadian FIs that conduct business all over the world.
Globally, Australia, Brazil, Canada, China, Hong Kong, India, Japan, Mexico, Saudi
Arabia, Singapore, South Africa, and Switzerland have adopted Basel III capital norms. In
many countries, FIs are regulated for anti-money laundering and fraud by both national
and international directives. European FIs must comply with regulations according
to Markets in Financial Instruments Directive (MIFID), Single Euro Payments Area
(SEPA), ISAE3402 and industry standards like PCI-DSS, local regulations like the Data
Protection Act, and regulations from the Financial Services Authority (FSA) aroundmaintaining records for a specific amount of time. In a global economy, there are further
provisions of data protection for transferring information outside of the European
Union (EU), within the EU, and from the EU to other countries.
The financial industry’s multi-faceted regulatory environment is even more complicatedwhen regulations are overlaid with compliance frameworks, like the COBIT IT
management and governance framework, and standards, such as National Institute of3“ Key Regulatory and Industry Initiatives,” Capgemini, https://www.worldpaymentsreport.com/kriis#Heat-Map-of-KRIIs-Globaland-Regional (accessed June 2015).

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DIGITAL GOVERNANCE AND COMPLIANCE

Standards and Technology (NIST). Alongside pressure from governments, consumers,
and regulatory bodies, these frameworks and standards have generated an increasing
demand for integrated information governance, compliance, and information risk
management technology solutions.
At the same time, digital technologies are introducing concerns about fraud, ethicalbehavior, and data security. With the proliferation of big data, social media, cloudcomputing, and Bring-Your-Own-Device (BYOD) policies around mobile device usage,
governance has become a major concern for FIs. As smartphones and tablets become
ubiquitous, many organizations have lagged in implementing security safeguards tocounter mobile threats.

A compliance failure can result in litigation, financial penalties, regulatory
constraints, and reputational damage. An effective GRC programaccomplishes many critical goals, helping to protect consumers andinvestors and ensure that the markets are fair, efficient, and transparent.
When implemented successfully, GRC reduces risk and crime, and helps tomaintain consumer confidence in the financial system.
Many FIs have minimal control over their operational systems and business processes
that capture data required for compliance and litigation purposes. Governance is a major
challenge, given the complexity of information systems. Processes and controls can be
put into place to give visibility into how information flows throughout an organization.
An integrated approach to managing information provides effective solutions for GRC.
In the digital world, IT budgets will have to significantly increase to meet the current
and future governance and compliance requirements. The majority of FIs (61 percent)expect to increase their IT investment by 25 percent over the next few years tocomply with regulations.4 But digital governance goes beyond controlling regulatory
information, and when implemented correctly, it uncovers the value of information inits many formats for improved operational performance.

Good Governance Is Good BusinessInformation governance is the practice of implementing policies, processes, andcontrols to manage information in support of regulatory, legal, risk, environmental, andoperational requirements. As volumes of enterprise information increase, so too does
the need for digital governance to ensure that this information is managed, secured, andsearchable. From a technology perspective, governance relies on integrated electronic4J ohn Ginovsky, “Compliance needs tech booster,” ABA Banking Journal, July 21, 2014, http://www.ababj.com/blogs-3/makingsense-of-it-all/item/4774-compliance-needs-tech-booster (accessed July 2014).

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records management, archiving, e-Discovery, and storage optimization. 5 These
technologies are applied to manage information throughout its lifecycle, from creationor capture and classification to long-term archival or deletion.
Information Governance Reference Model (IGRM)

Linking duty + value to information asset = efficient, effective management
U N I FIED G O VERN A N C
EBusiofitness
ProfitVALUE
Create, Use

DUTY

LEGAL

ASSET

Hold,
Discover

Risk

RetainArchive

Store,
SecureIT

Dispose

RIM

PR

OC

E SS T R A N SP A R EYNCEfficiency

Risk

Duty: Legal Obligation
for specific information

Value: Utility or
business purpose of
specific information

Asset: Specific containerof information

FIGURE 6.3: Information Governance Reference Model 6

Successful information governance programs demand that companies balance the needs
and priorities to mitigate legal and business risks with the costs required to manage
both unstructured and structured information. For a formal digital governance strategy
to be effective, key resources and stakeholders need to be identified, empowered,and supported; policies must be incorporated into relevant processes; education andtraining should be provided to all employees; technology infrastructure optimized; andthe appropriate solutions implemented to support secure and reliable operations.

Information governance is more than just "records management": it isa means to manage risk, ensure compliance, and achieve operational
excellence and competitive advantage from enterprise information.
In the following feature, ASR Nederland is demonstrating how good governance is goodfor their business, enabling them to comply with regulations and providing strategic
advantage through improved customer service.
5

A lys Woodward and Carla Arend, “OpenText in Europe: Information Governance and Cultural Transformation,” IDC, April 22,
2014.

6

EDRM: http://www.edrm.net/projects/igrm (accessed July 2014).

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I N N O VAT O R S T O R Y

ASR Nederland
Using a combinationof business processmodeling and operational
improvement solutions, ASR
has been able to streamline
and modernize existingprocesses while responding
to legislative change.
FIGURE 6.4: ASR Nederland

ASR Nederland is the third-largest insurance company in the Netherlands. It offers
insurance products, such as pensions, life insurance, non-life insurance, occupational
disability, and health insurance contracts to Dutch retail and corporate clients.
One of ASR’s core business processes is disability income insurance. Previously, this claims
process was paper driven. Both medical and technical information were kept in one folder
and accessible to unqualified personnel, consequently leading to a non-conformance of
the Dutch privacy law. In addition, ASR required a significant amount of storage space
to store the continuously growing folders. ASR recognized the need for a solution thatwould improve business processes, enable collaboration between departments, reduce
costs across the organization, and permit only authorized access to information to comply
with regulations.
Using a combination of business process modeling and operational improvement solutions,
ASR has been able to modernize existing processes while responding to legislativechange. For example, medical and technical information related to disability claims arenow separated and only accessible to qualified personnel—helping ASR comply withprivacy legislation. As well, the entire claims management process can be measured togive management visibility into processes. The flexible environment supports a new way
to benchmark so that business activities can be monitored across numerous divisions.
The solution gives ASR an enterprise-wide standard claims processing system that has
dramatically improved internal efficiencies and increased productivity. Employees now
process 80 percent of claims on time, which has led to a 25 percent reduction to the claims
processing team, and services costs and indemnity have been significantly reduced—allof which enable ASR to deliver new products faster, comply with regulations, and provide
better customer service.

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Compliance as a Driver for Digital Governance
As illustrated in the above feature, firms are placing greater importance on information
governance. In a recent survey, executives in financial services identified information
governance as very important to their business.7 The more data an organization storesand manages, the greater the risks for security breaches and non-compliance.
Ability to comply with regulations
Better executive decision-making for strategic planning
Improved customer relationship (loyalty, experience, etc.)
Faster time-to-market with new and existing products and services
Increased revenue
Ability to react quickly to market changes and opportunity
Improved business processes
Improved purchasing power with partners and suppliers
Expanded and optimized manufacturing processes
0%
Critical Priority

High Priority

20%

Moderate Priority

40%

60%

Low Priority

80%

100%

Not a Priority

FIGURE 6.5: Compliance is Key Driver for Information Governance 8

Despite the growing awareness of the importance of governance, organizations areoften caught unaware in cases of litigation or non-compliance. As we have witnessedover the past two decades, it is often a compelling event that impacts the business, andthis drives stakeholders to take action. When they find themselves faced with a major
lawsuit or the e-Discovery process, organizations often struggle to identify criticalinformation within their systems. Sorting through volumes of information for relevant
records can lead to excessive spending on legal reviews and, in many cases, fines related
to the inability to defensibly demonstrate that information has been produced in a timely
manner. The same can be true of an investigation related to a regulatory audit. When afirm has faced one of these situations, the cost and business disruptions are often thedrivers of governance initiatives.

7

David Horrigan and Alan Pelz-Sharpe, “451 Data: Information governance falls flat despite the hype,” 451 Research, February
20, 2014.

8

 ichele Goetz and Henry Peyret, et al., “Data Governance Equals Business Opportunity. No, Really,” Forrester Research,M
http://www.forrester.com/Data+Governance+Equals+Business+Opportunity+No+Really/fulltext/-/E-RES83342 (accessed
June 2015).

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DIGITAL GOVERNANCE AND COMPLIANCE

As illustrated in Figure 6.5, regulatory compliance is the most significant driver of an
information governance program. Up to 70 percent of data management professionals
consider compliance a critical or high priority.9 Over and above regulatory compliance,
firms that adopt information governance experience additional benefits, including
business continuity, savings on storage and infrastructure, unimpeded knowledge
sharing, stronger security and privacy, and the ability to respond quickly and proactively
to investigations of all types.10

The Benefits Outweigh the Costs“I didn’t know…” – KEN LAY, FORMER CEO, ENRON
With enforcement, fines, and business reputation at stake, the cost of non-complianceoutweighs the cost of investing in digital governance. A global study of multinationalorganizations revealed that the cost of compliance was more than $3.5 million U.S.,
significantly less than the $9.4 million in costs for failing to comply with regulations.11$24.09EnergyTransportation$17.98Industrial$17.44

Financial Services$16.01

Pharmaceutical$12.77

Consumer Products$12.44

Technology$11.89Public Sector$10.20Communications$9.97

Retail

$9.24

Healthcare$8.86

Education & Research

$6.83
$0

$15

$30

FIGURE 6.6: Compliance Costs by Industry (in Millions of USD)129

 ichele Goetz and Henry Peyret, et al., “Data Governance Equals Business Opportunity. No, Really,” Forrester Research,M
http://www.forrester.com/Data+Governance+Equals+Business+Opportunity+No+Really/fulltext/-/E-RES83342(accessed June 2015).

10

Ibid.

11“ The True Cost of Compliance,” Ponemon Institute, January 2011, http://www.tripwire.com/tripwire/assets/File/ponemon/
True_Cost_of_Compliance_Report.pdf (accessed June 2015).

12

Ibid.

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CHAPTER 6

Non-compliance costs are the costs that result when an organization fails to comply
with legal obligations. On average, companies budget approximately $1.5 million U.S.
per year to comply with laws and regulations.13 Compliance costs are based on activities
that organizations use to meet specific rules, regulations, policies, and contracts thatare intended to protect information assets.
There are greater benefits associated with compliance beyond mitigating risk andavoiding penalties. In theory, if an organization is complying with regulations, it
should also be achieving higher levels of efficiency and performance through effective
information governance. Regulations are based on demands that describe optimalbusiness operations. By practicing active compliance, FIs are ensuring that theirbusinesses adhere to industry-established best practices and procedures. Compliancegives organizations the mandate to take measures that can uncover value—proactive
measures like best practices, employee training, internal controls, and benchmarking.
Information governance plays a key role in empowering FIs to comply in a cost-effective
and efficient manner. It ensures smooth operations, proper delegation of authority,and the management of risk. Governance helps to overcome the inertia of “silos”—
organizational, functional, and process silos—and reduces the challenge of tracking,monitoring, and reporting on regulations. To minimize error and control costs, firms
need to have a framework in place to help manage these processes and controls andinform all employees about the necessity of implementing governance while meeting
reporting and auditing demands.

Data Security
There is a correlation between investing in compliance and enforcing information
security. As digital technologies have evolved, so too have information security threats.
Attacks today are multi-stage, hard to discover, highly targeted, and on the rise.
The Global State of Information Security ® Survey 2015 found that security breaches haveincreased year-over-year. The total number of security incidents detected climbed
to 42.8 billion in 2014, an increase of 48 percent from 2013. That’s the equivalent of
117,339 incoming attacks per day, every day.14 The annual cost of cybercrime to theglobal economy ranges from $375 billion to $575 billion.15 As we see in the following
figure, the costs of data breaches vary by sector, with heavily regulated industries suchas financial services having the highest per capita data breach cost ($145).16
13“ The True Cost of Compliance,” Ponemon Institute, January 2011, http://www.tripwire.com/tripwire/assets/File/ponemon/
True_Cost_of_Compliance_Report.pdf (accessed June 2015).

14

“ Managing Cyber Risks in an Interconnected World: Key Findings from The Global State of Information Security ® Survey 2015,”
PriceWaterhouseCoopers, September 30, 2014.

15

Ibid.

16

 ierluigi Paganini, “Reading 2014 Ponemon Cost of Data Breach Study, Security Affairs,” March 8, 2014, http://securityaffairs.
P
co/wordpress/24717/security/ponemon-data-breach-study.html (accessed June 2015).

134

DIGITAL GOVERNANCE AND COMPLIANCE

Healthcare

$359
$294

Education$227

Pharmaceutical
Financial

$206
$177

Communications
Industrial$160

Consumer$155

Services$145

Energy$141

Technology

$138
$137

Media
Hospitality$122

Transportation$121

Research

Average = $145

$119

Retail

$105

Public$100

Source: Cost of Data Breach Study,
IBM/Ponemon Institute, May 2014

FIGURE 6.7: Per Capita Cost by Industry of Data Breaches17

Over the past year, every industry sector across the globe experienced a cybersecurity
breach. Financial services is no exception. In the U.K., payroll information and bankaccount numbers belonging to 100,000 people were stolen by an insider and published
online. In South Korea, 105 million payment card accounts were exposed in a security
breach. In the U.S., JPMorgan Chase disclosed that the names, addresses, phone
numbers, and email addresses of 83 million account holders had been exposed in oneof the biggest data security breaches in history.18 In the Middle East cyber thieves stole
over $45 million from the worldwide ATM accounts of two banks.19 In one of largest
bank thefts ever, cyber criminals targeted more than 100 banks and other FIs across 30
nations. 20 Examples of data breaches are global and plentiful.

17

 ierluigi Paganini, “Reading 2014 Ponemon Cost of Data Breach Study, Security Affairs,” March 8, 2014, http://securityaffairs.
P
co/wordpress/24717/security/ponemon-data-breach-study.html (accessed June 2015).

18

John Leyden, “JPMorgan Chase mega-hack was a simple two-factor auth fail,” The Register, December 23, 2014, http://www.
theregister.co.uk/2014/12/23/jpmorgan_breach_probe_latest/ (accessed June 2015).

19

“ Managing Cyber Risks in an Interconnected World: Key Findings from The Global State of Information Security ® Survey 2015,”
PriceWaterhouseCoopers, September 30, 2014.

20

 avid E. Sanger and Nicole Perlroth, “Bank Hackers Steal Millions via Malware,” The New York Times, February 14, 2015,D
http://www.nytimes.com/2015/02/15/world/bank-hackers-steal-millions-via-malware.html?_r=0 (accessed June 2015).

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CHAPTER 6

When there is a security breach at a financial institution, it typically makes headlinesand garners both public and legislative scrutiny. Financial impact may include
decreased revenues, disruption of business systems, regulatory penalties, anderosion of customers. Non-financial impact may include reputational damage, thepirating of products, diversion of research and development information, impacts toinnovation, and loss of sensitive information such as mergers and acquisitions plans andcorporate strategies.
Banking and financial institutions are the biggest targets of information security
breaches and cybercrime because they maintain personal data across many businessapplications, this includes online transactions and electronic communications that
contain confidential and personal information. Their infrastructures are weak, often
consisting of combined legacy systems with new technologies that run across a highly
distributed (and in some cases, global) network of branches, call centers, and websites.
Their security solutions are complex and vulnerable.
From organized crime syndicates to hacktivists, vulnerabilities permeate all levels of
IT systems. While many firms have good external defenses in place, the real threat of asecurity breach comes from unauthorized internal access to sensitive data. Current andformer employees have become the most-cited perpetrators of cybercrime. The rise of
the mobile workforce has contributed to this, increasing risk through the lack of clearly
defined or implemented BYOD policies to lost or stolen devices and the accidental
sharing of confidential information across devices. Due to increasing amounts of
information shared between firms and their partners, a growing area of concern for data
breaches includes third parties and the lack of policies that protect the data exchangedin these relationships.

Unauthorized
Staff
Other

Staff

13%

53%

Malware/Viruses

14%49%

External
Hacking

20%

Unauthorized
Ex-Staff

4%

FIGURE 6.8: The Most Likely Source of a Security Breach 21

21

Mark Barrenechea and Tom Jenkins, “e-Government or Out of Government,” OpenText, 2014.

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DIGITAL GOVERNANCE AND COMPLIANCE

Regulators are starting to address cyber risks. When information needs to be retained
for litigation or compliance purposes, the information must remain intact, defensible,and discoverable. Without the requisite controls and discovery mechanisms, information
can become a threat to the firm. It could be the defense of a lawsuit or an audit—in either
case, compromising the information represents both a financial and a competitive risk
to the firm.

Removing Risk via Information Management
Information governance, compliance, and information risk management are closely
related. In fact, organizations that implement information risk management can reducethe cost of compliance programs by as much as 50 percent in the first year. 22 This isbecause with a controls framework in place, it’s often easier for firms to comply. Today’s
global financial ecosystem requires a stronger focus on a risk-based approach thatprioritizes information as an organization’s valued asset with considerable perceived
threat. NIST recommends that organizations identify and classify their most valuable
information assets and monitor their data across their business network. A strong GRC
framework helps to combine technologies, processes, and people to mitigate risk.

Know Your
Risks
Know Your Business
ManageKnow Your
Company

PeopleTeams
Communications
Processes
Information

Know Your
Employees

Know Your
Customer

FIGURE 6.9: Policies and Controls Mitigate Risk22

 ebra Logan, John Bace, and Lane Leskela, “Use a Process Framework for Compliance and Think Long Term,” Gartner, May
D
2004.

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CHAPTER 6

Despite best efforts, no real risk can be mitigated to a zero percent likelihood of occurring,and some risks are 100 percent likely to happen. So how can FIs determine which risks
to mitigate and which consequences to prepare for? An effective tactic is defensible
deletion, which involves consistently governing, classifying, and managing information.
Keeping all data leads to high storage and infrastructure costs, as well as increases in
the costs of litigation when content must be searched, examined, and reviewed from allof its sources. With the high volume of content in the financial industry, this approachis less tenable.
Not all information is created equally, and not all information exposes an organization to
the same risk. Identifying information that is critical to continued business operations
allows FIs to craft policies that result in expending resources where it provides thebiggest benefit. Identifying information that, if lost or disclosed, would cause nothing
more than a minor nuisance prevents organizations from expending resources where
there is little appreciable gain.
The protection of information should be holistic, covering all bases to avoid information
risks that might violate legislation, cause non-compliance, or adversely impact theorganization's ability to perform.

The Need for Holistic Information Management
Financial services is a data rich industry. In the wake of new legislation and standards,
most notably the Dodd-Frank Act, finding effective and efficient compliance solutions
is complex. Demonstrating that privacy of information laws are followed and providing
transparent reporting are just starting points. Answering to regulatory audits andrequests for information in a hyper-timely manner is an emerging requirement. Perhaps
most importantly, though, progressive firms are channeling resources to make sure that
information and process management systems are flexible and agile enough to respondto an ever-changing regulatory landscape.
In the middle of the present regulatory overhaul, FIs will continue to face capability
challenges relating to connectivity, compliance, and the expansion of existing
infrastructures. Areas such as information management, new business models,reporting, and analytic functions have all become significant pain points that need tobe addressed.

Data Management Challenges
Among the top challenges for FIs in complying with the new regulatory framework is
the need for better data management. The amount of data they must integrate andconsolidate, the demand on data availability, and the need to ensure consistency areproblematic as mergers and acquisitions become more prevalent. For this reason, the138

DIGITAL GOVERNANCE AND COMPLIANCE

amount of manual processing, siloed data, inefficiencies, and lack of standardization
have created substantial obstacles to compliance and performance.
A unified repository helps FIs overcome silos to consolidate and aggregate data.
Analytics can then be applied to provide a multi-dimensional view of transactional
data at all levels. Without this transparency, it becomes difficult to re-use data anddocumentation across various business units when following standardized processes
to comply with regulations. Sharing data between different departments necessitates
adopting an enterprise-wide infrastructure that permits systematic informationexchange across automated processes.

The Impact on Business Models
Forward-looking FIs are reevaluating their current business models to effectively
integrate and govern regulatory compliance on an enterprise-wide scale. Moving wellbeyond basic compliance, successful business models will integrate stress testing,capital management, collateral management, strategic planning, and information risk
management. Additionally, business requirements need to have the flexibility to adapt
to and accommodate new rules to govern risk and eliminate redundancies acrossinformation initiatives.
As they restructure their operating models, proactive firms will find their efforts
resulting in a broader long-term strategy that improves industry practices. This
strategy ensures that, as regulatory requirements continue to evolve, systems become
more resilient and can adapt to reforms across jurisdictions that impact risk, finance,
and treasury functions. With industry regulators focusing on the rebuilding of FIbalance sheets and capital adequacy, the demand on scarce technology budgets will be
stretched to the breaking point. In the digital world, FIs may make their investments incompliance processes and technology by outsourcing them or partnering with cloudbased service providers.

Increased Reporting Requirements
A critical part of evolving regulatory and compliance management is the increase
in reporting. Unfortunately, existing manual processes that were established toconsolidate, analyze, and provide informational reports to the board and regulatorslack the efficiency needed to produce comprehensive scenario-analyses and stress-test
results that adequately meet reporting demands.
From the single transaction level to aggregated enterprise analysis, enhanced reporting
capabilities must provide full access to transactional, derived, or calculated data on all
financial instruments and between various business units as required. The capability of
extracting and summarizing aggregated information for mandatory reporting purposes
will require IT infrastructures to function across channels and in real time. Without this139CHAPTER 6

functionality, it will be difficult to provide consolidated reports, results of calculations,scenarios, stress tests, and time-sensitive compliance feedback for resolution purposes.
For effective GRC, FIs need to have the right controls in place to manage their informationand provide accurate reporting on the implementation of these controls. These controls
not only protect the accuracy and security of data, they also ensure that the right data
is protected. Only then can data be stored, managed, analyzed, and retrieved to ensurethat the firm operates optimally and efficiently.
In the following customer feature, Boubyan Bank is adopting digital models
for information and process management to improve operations and comply
with regulations.

EIM Delivers Key Elements for SuccessTo keep pace with new regulatory changes and increases in cybercrime, enhanced
information management technology and automation capabilities will be critical.
The primary goal moving forward for FIs should be in developing stronger decisionmaking frameworks and tools, capable of accurately assessing functional capabilities
that can improve overall enterprise-wide compliance and information risk
management functions.
As an efficient and large-scale data management platform, EIM provides the backbone
for an effective GRC program. It helps to ensure the security, integrity, and accessibilityof financial services data. When an electronic investigation (audit or legal review)is initiated, systems have to be examined, information identified, and policies wellunderstood and documented. If policy is maintained centrally, then one central source
can be understood, documented, and defended. This approach results in significantly
less cost and time invested, instead of examining each and every system of record forcorporate information. The application of EIM breaks down silos within the enterpriseand helps to create the connectivity, formats, and systematic reporting required tocomply with policies and regulations.
When organizations have disparate systems and no overall governance, content
deletion becomes very difficult and ineffective. EIM connects procedural guidancewith documentation, process execution tools, reporting and audits, and integration
with Enterprise Resource Planning (ERP) systems—all across the business network. It
brings consistency and scale to the management and preservation of information byincorporating records management with solutions for archiving, email management,
search, and e-Discovery.

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I N N O VAT O R S T O R Y

Boubyan Bank
“Automation has removed
many mundane tasks and thealerts that are provided ensure
they are able to meet their Key
Performance Indicators (KPIs).”SHADI ABU SHAMMA, PROJECT MANAGER AT
BOUBYAN BANKFIGURE 6.10: Boubyan Bank

Boubyan Bank, headquartered in Kuwait City, was established in 2004 as an Islamic bankworking in accordance with the Islamic Shari’a. Boubyan’s culture encompasses a focus on
customers’ needs, working as a team to exceed expectations with the highest standards ofintegrity and professionalism. Through careful, planned growth, the bank achieved profits
exceeding 20 million Kuwaiti Dinar ($67 million U.S.) in 2014. The bank provides a rangeof financial services to individuals and corporate clients, from day-to-day banking to credit
cards and loans.
Like most FIs, Boubyan operates in a compliance-driven environment. Business processes
must be documented, and interactions and transactions with clients recorded. Fromaccount opening and loan application to ongoing correspondence and account servicing,a full audit trail is required. As the bank grew, it was challenged to comply with regulations
based on its reliance on manual, paper-based processes. Documents shared by email were
often lost, misfiled, or duplicated. As a result, processing times for client applications
were excessively long. Boubyan needed a solution that would automate workflows andprovide compliant, long-term archiving and reliable retrieval capabilities for more than one
million documents.
Boubyan implemented a content management solution, rolling it out across all the Bank’s
departments. The new solution automated previously manual workflows, accelerating theprocessing of applications. Where the loan application processes used to take several days,
employees can now confirm application status within 15 minutes—while the customer is stillin the branch—to deliver high standards of customer support. The solution also provides
a scalable platform for the capture, processing, and management of documents across theenterprise. The central repository makes it easy for employees to quickly search for andretrieve documents in a fully compliant and audited environment. In addition, the solutiondelivers valuable real-time reporting and dashboards for insight into processes that canbe further streamlined in order to meet service level standards, all so that Boubyan cancontinue to improve operations and enhance customer service.
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CHAPTER 6

Deep Integration
with ERP

EIM+

Content-Enriched
Business Processes=
Workspaces natively extend
ERP processes with EIMEnterprise Asset Management

Deep connection with ERP
data, structures, roles
and permissions

Project Management
Case Management

Workflow

Seamless integration
with various ERP UIs

Archiving

ERP/EIM always ‘in-sync’

And Many Others

Document Management
Collaboration & Social Media
Records Management
Content Access
CaptureCustomer Relationship Mgmt
Quality Management
Procurement

FIGURE 6.11: EIM is a Part of a Fully Integrated GRC Management Solution

Across the business network, the strategic deployment of a third-party cloud-based
service to protect valuable data allows the necessary connectivity, translation,
and aggregation both internally and externally, providing substantial competitive
advantage. An aggregated reporting program connects FIs with their partners andcounterparties, providing accurate daily feeds of regulatory and compliance data on
behalf of the client or their firm. At any given time, and in various formats, data canbe loaded and delivered across channels to increase global management oversight. This
helps to prove that the right data has been retained at the right time and is securely andcost-effectively accessible.
EIM gives organizations the ability to apply governance across departments, content,
application silos, and networks. EIM manages the lifecycle of enterprise content, whileembedding information directly into processes to give content a consistent context.
Effective records management allows content like emails, documents, faxes, and paper
files to be classified as business records and managed to comply with governance andregulatory requirements. By combining structured and unstructured data to alignoperations, it connects the flow of information across the enterprise to add value toorganizational activities. In the following interview, Fluor is digitalizing its processes
and information to align operations and comply at a global level.

Information Flows: Time-to-Compliance
Around the world, FIs face growing challenges from increased regulation. The entire
industry is under tremendous pressure to implement greater rigor and disciplined
information governance. EIM helps FIs to accelerate their time-to-compliance andensure their content is safe, secure, and complies with regulations. Let’s examine how
EIM helps to manage time-to-compliance to combat money laundering.
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TRANSFORMATION IN ACTION

Fluor
Fluor is one of the world’s largest publicly traded engineering,procurement, construction (EPC), maintenance, and project
management companies. Fluor works with governments and clientsin diverse industries in over 80 countries to design, construct,and maintain complex and challenging capital projects, including
manufacturing plants, refineries, pharmaceutical facilities, healthcarebuildings, power plants, and telecommunications and transportation
infrastructure. Clients depend on the expertise of Fluor’s 40,000
employees operating globally to deliver capital projects safely, onschedule, within budget, and with the quality they expect.

FIGURE 6.12: Fluor – Digitalizing Information and Processes to Comply

Below is an interview between Dave Guzman, Senior Director of Finance Systems & Business
Process Integration at Fluor Corporation and Tom Jenkins, Executive Chairman of OpenText.
TOM JENKINS: Can you describe your roleat Fluor?
DAVE GUZMAN: The main objective of my teamis to provide leadership and hands-on project
management for the global finance organizationin the improvement of work processes andthe selection and development of financial
systems. We give business units and country
controllers the automated system solutions
they require to support business growth in
new countries, regions, business lines, and new
business execution models. I specifically143

TRANSFORMATION IN ACTION

provide management oversight on highimpact, finance-led system and work process
initiatives, including accounts payable, records
management, financial planning, governance,
risk, and compliance.

How many vendors do you support?

Can you give us an idea of the scopeof some of the projects Fluor has been
involved in?

Wow. And your payment processes haveto meet all the regulatory requirements ineach country.

We often work in very remote locations, forexample: building copper mines at 15, 000 feetin the Chilean Andes; oil refineries in the Saudi
desert; transportation highways in the U.S., aswell as major infrastructure projects and power
plants across most of the world.

Right. We have to keep careful track of all ofthem, especially in accordance with local tax
reporting, such as Form 1099 in the U.S.

We have approximately 100,000 vendors inour database, but in an active and ongoingbasis, we make payments to over 13,000
different vendors per year.

With this large scope comes enormous
challenges and complexity, from supply
chain management to vendor invoice
management to human capital management
in remote offices.

Yes, definitely. Some of our biggest challenges
are to execute routine transactions in a remotelocation—processes we take for granted in local
offices. Construction projects involve a lot of
people, from vendors to employees. In a remotelocation, routine transactions like processinga vendor invoice, an expense report, or apaycheck, are critical and very paper-reliant.
We require paper for everything—no changeorder, no purchase order—no work. Often, we
set up a company to support these transactions
for the duration of a project. So we might createand shut down a company within a three-year
cycle, for example.
How do you manage paper in terms oftransaction volume for vendor information
management, for example?

From a finance perspective, we process about
40,000 to 50,000 invoices per month, sothat's over 10,000 per week, and globally, thattranslates to about 600,000 invoices in various
languages across approximately 40 countries
every year.

How do you implement processes in yoursystems to comply with new regulations in
new countries? Do you do it in batches oron a case-by-case basis?

We normally manage it on a case-by-case basis
per country. When it comes to regulations,each country has its own flavor. In the U.S., forexample, there are different regulations on how
to treat vendors. Since we’re a U.S. company,
we focus on North America and Europe first
because those are the countries with the highest
transaction volume. Batch type processing isn’tvery effective for us. In some extreme situations,in lower volume countries for instance, we haveto do it manually. We’ll use human intervention
when it makes the most economic sense.
Describe the process. Do you use a prepackaged set of processes?

We have a single instance of SAP ® withassorted EIM solutions, so we just set up a
new project, activate a new company codewhen necessary, and everything is ready togo. It’s a very standardized process that we
use globally. To connect our unstructured andstructured information, we link everythingback to the SAP document number. Everythingin our EIM repository is linked to a FI (SAP)
document number.
So, rather than dealing with hybridarchitectures or the Cloud, you manage it
all on-premises?
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TRANSFORMATION IN ACTION

Yes. We do it all on-premises using the SAP
architecture to categorize information in a single
instance into industry groups, business lines,
countries, with different road maps for financial
consolidations, external reporting, internalreporting, etc.
Have you completely removed paper fromyour processes?

Actually, we’ve just implemented records
management this year, and that’s the biggest
transformation story we have to date. Most of
the countries we operate in still require paper;
the country controllers are still putting that
paper into boxes, filling out the retention form,
sending them off to a long-term retention
warehouse, retrieving them occasionallyfor audits, and then sending them back to
the retention facility for a fee. At the end of
the retention period, they have to destroy
these records for another fee. Using records
management, we have updated all of ourpolicies for finance, including our retention
policies. This means that if the country does not
require paper, then we won’t store the paper. We
did a survey across our country controllers anddiscovered that 70 percent of our transactions
can be maintained digitally, rather than on
paper. We’re actually seeing more and more
vendors relying on digital invoicing in countries
that are more advanced, like Australia, theNetherlands, and other countries in Europe.
Does your bandwidth in remote offices
support this increased use of electronic
invoicing?

We don't have too much of a problem withlatency. Our shared service centers are in India,
the Philippines, and Poland. We house four
terabytes of financial documents in our records
management system, and data retrieval is fairly
fast and seamless. Overall, it takes less thanten seconds to retrieve a document. In the U.S.,
it’s very quick, usually about a second or two.
We run a user experience survey periodically toassess the latency we're experiencing

around the world. We’ve found that when
there is an issue, it’s usually dependent on
the country's infrastructure instead of Fluor’s
internal network.
Looking ahead, over the next ten years,
what do you figure will be your next big
challenge?

As of January 1, 2015, we’ve digitalized ourentire records management process for financialtransactions. We are now looking at processes
that can be mobile-enabled. For example, wehave a project in the pilot phase right now
around mobilizing certain processes for ourconstruction staff at a refinery in the U.S.
Our original business case assumed devices
using Wi-Fi, but our client requested cellularconnectivity due to potential safety and IT
security issues. Since the costs for cellularconnectivity were not in our original businessmodel, we’re now facing a challenge to justify
the business case to the client to integrate
mobility at the construction site. There are also
other things to take into consideration from ausability perspective, like the logistics involvedin switching from clipboards to mobile devices.
Setting up charging stations for several hundredtablets must also be enabled onsite, which canbe a challenge, as well as dealing with dust, rain,
and harsh weather or damaged devices.
How will you give the Millennials accessto information? They’ll want to bring theirown devices to work, and they’ll wantaccess to information and apps.

At the jobsite, we’re looking at putting a tablet
into the foreman’s hand to give them accessto information on the ground. Mobile accesswould allow them to monitor things like
concrete pours, number of welds, the quality
in the field, safety statistics, footage of pipeline
being installed—and all of this forms the basisof a very accurate progress report for theclient, which is very important. Clients wantaccess to dashboards and status reports on aregular basis.
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TRANSFORMATION IN ACTION

Regarding financial transactions within SAP,
we’ll examine the need for mobile access ormobile apps where it makes sense to accessor process information quickly in a remotesetting. For example, even though we’re aglobal construction company, we don’t havehigh demand to pay a vendor on a smartphone
because the approver normally needs to validate
specific information that might reside back in
the home office. The approver can typically wait
until he or she returns to their office to approve
payment or process an expense report. A mobile
time sheet, on the other hand, makes betterbusiness sense because our weekly time sheetsnormally drive payroll and billings to our clients.
If an employee does not submit a time sheet,the employee might not get paid correctly andour clients will not be billed on a timely basis.
It would be advantageous to be able to do thisremotely in certain cases, from a mobile device.
Therefore, the timesheet will likely be one of
the first mobile apps we develop related to SAP
financial transactions.
When you look back now at the digitaltransformation Fluor has undergone, what
was your biggest challenge over the last ten
years?

I would say the biggest challenge was employee
adoption, especially in terms of moving fromanalog to digital processes that require online
access and electronic approvals for documents
like invoices. Everyone was so used to working ina paper-based world. Today, our executives are
realizing the big benefits of a paperless office.
Thank you Dave.

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DIGITAL GOVERNANCE AND COMPLIANCE

Money laundering attracts significantly more attention from government agencies thanother economic crimes. The crime stems from the failure to adhere to expected codesof business conduct. Many countries, including the U.S. and the U.K., are committed to
enforcement programs with increasingly stringent standards and penalties for money
laundering. Money laundering is a risk if a firm neglects to report it. If a firm is diligent
in its efforts to review and monitor customer transactions according to the law, they
will likely meet regulations. One survey found that 27 percent of FIs experienced
money laundering in a specified time period, followed closely by insurance companies
at 11 percent. 23
Money laundering impacts Know Your Customer (KYC) processes, maintaining
compliance operations, and information risk management. KYC refers to due diligencethat FIs perform in order to identify their clients and ascertain relevant information
pertinent to doing financial business with them. Policies are applied to prevent identity
theft, fraud, money laundering, and terrorist financing and to regulate the risk in businessof lending and investment. A combination of information and process management helps
FIs find the balance between acquiring new customers and complying with regulations.
Regulatory compliance requires financial institutions to execute solid information
governance policies and ensure transparent record keeping. As part of a comprehensive
GRC solution, critical business information can be captured in an EIM system, where it
can be de-duplicated, compressed, and archived according to a firm’s retention policies.
Strong authentication, data encryption, a layered permissions structure, and version
control empowers FIs to monitor how data is created, accessed, and used. Archiving
ensures that content is stored only once and is accessible in the event of discovery or
audit, reducing the time it takes to find information from weeks to mere hours. Autoclassification prepares records for archiving and disposition as part of a content lifecycle
management strategy. In the archive, the records under investigation can be searched
for, and once discovered, holds can be placed. This information can then be automatically
exported as evidence in a legal investigation into money laundering.
As a key component of EIM, Business Process Management (BPM) delivers an effective
process control engine—initiating processes, defining and distributing tasks, recording
their completion, and reporting on the outcomes of a given compliance process. Whenthe process is complete, a full audit is created. Encryption and data compression function
as part of the process to optimize storage and security for the archives.

23

“ Managing Cyber Risks in an Interconnected World: Key Findings from The Global State of Information Security ® Survey 2015,”
PriceWaterhouseCoopers, September 30, 2014.

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FIGURE 6.13: Hold Maintenance is Part of the Time-to-Compliance Process

The requirements for governance and compliance will only increase with globalization,
mergers and acquisitions, and industry consolidation. As information flows across
many channels, the lack of governance policies blocks information’s path to value.
Aligning processes and information on a common infrastructure protects assets while
helping to ensure compliance. Procedural guidance can be more readily combinedwith documentation, process execution tools, reporting and audits, and ERP systems.
An integrated information architecture acts as a central nervous system to capture,
track, and report on regulatory requirements. By automating processes and integrating
information, organizations can transform risk into opportunity by being able to react tochanges in regulations more quickly than their competitors.

CaptureClassify

ManageDiscoverArchive

FIGURE 6.14: Time-to-Compliance Information Flow

Compliance is one of the most significant challenges for FIs. EIM helps to accelerate andoptimize compliance strategies. Firms can enforce security and information controls
automatically, without placing the burden on legal, compliance, IT security, and otherdepartments. They can establish and demonstrate transparent and allowable disposition
policies and procedures, which is critical to meeting the requirements of Dodd-Frank,
Basel II, and other international compliance initiatives.
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Compliance and Governance Challenges
Some organizations have implemented digital governance programs, faced governancechallenges, and been unsuccessful. This may be because they’ve not achieved strong
enough user acceptance of the systems. Governance should be built into systems
and processes rather than presented as a manual task for end users. As we can see
in the time-to-compliance information flow described above, the key is bringing thegovernance technology to the user’s environment of choice and making it easy to use,
enabling them to spend their time doing their daily activities instead of finding ways to
get around using the system.
In addition to poor user adoption, governance challenges emerge when commitment
from all governance stakeholders is not incorporated into digital governance planningfrom the outset. Members of the legal and compliance groups, IT, and line-of-businessexecutives should come together to plan and implement an information governanceprogram. Many organizations form a stewardship committee to make critical decisions
about the program. Carefully choosing the members of the committee ensurescommitment and decision-making power.

Disruptive Technologies and GRC
As connectivity creates zero distance and devices become more powerful, the digitalenterprise will be expected to control the flow of information in any format across every
channel—from mobile devices and tablets to social media shared in the Cloud. Challenges
around compliance and governance will increase as digital content grows and people
continue to use mobile devices and social software to create and share information.
In the digital world, the workplace will support a social, mobile workforce. Generation
Z will work where and how they want to. Many will use mobile devices and social
applications to create and collaborate on their content, resulting in corporate
information existing outside the firewall, and more importantly, outside information
governance policies. The business ecosystem will require that FIs synchronize data with
their counterparties and collaborate outside the firewall. In many cases this will occur
via cloud-based platforms and mobile devices.
As mobile devices are adopted by the enterprise, security will be a growing concern.
Security on a mobile device is a combination of security over-the-air, over-the-wire,
and permission-based access to systems. Using EIM as a platform, mobile devices canverify permissions to a corporate repository or intranet. The mobile platform adopts theversion history, audit capabilities, reports, security, and permissions contained with the
EIM system. Device governance is provided so that content can be stored and utilized on
mobile devices, and if the device is lost, the content can be removed remotely.

149CHAPTER 6

Like mobile devices, social media introduces similar concerns around information
governance and security. Many FIs are using social media to connect with theircustomers. Often, social media is used without governance systems in place. Social
compliance programs can help ensure governance and protect brand reputation.
Organizations with social compliance programs in place are 15 percent less likely toviolate requirements governing brands and organizational activities, avoiding costly
impacts on brand image and legal repercussions. A social compliance program requires
storing and centralizing social content in a secure EIM repository where it can be
managed as a corporate record. 24
As outsourcing to the Cloud continues, and Software-as-a-Services (SaaS) becomes
the standard platform for enterprise applications, organizations will be required to
manage records in many locations. EIM provides visibility for IT governance and data
management and reduces risk by eliminating duplication and supporting automatic
disposition of records according to corporate policy. While mobile devices, social media,
and cloud computing are paving the way for new opportunities and dramatic increases in
productivity, widespread usage must be protected with the robust security and privacy
mechanisms inherent in an EIM system.

Balance Matters
EIM helps FIs manage compliance, risk, and governance through established controls for
information policies, procedures, business rules, and roles and responsibilities. Internal
controls are typically based on processes designed to provide reasonable assurance
regarding the effectiveness and efficiency of operations, reliability of financial reporting,and compliance with applicable laws and regulations.
Cybersecurity threats will never be completely eliminated and regulatory andcompliance requirements will only become more rigorous. Financial services firms
have long recognized the need for improved technologies for better innovation. But
with impending timelines and uncertainty surrounding regulatory developments, FIs
continue to struggle with balancing compliance spending with customer acquisition anddeveloping new products and services. As many of the compliance rules continue to be
defined and rolled out, FIs need to adopt an accelerated approach for complying withnew regulations while staying focused on client-centric initiatives across the enterprise.
The good news is that a strategic approach to governance and compliance initiatives
brings considerable long-term benefits, while improving the quality of a firm’s information
risk management program. FIs that combine compliance technology investments withclient experience and business process improvements are well positioned for successin the future. Preparing for an evolving set of compliance imperatives is an opportunity
24“ Social Compliance: Protect Brand Equity and Ensure Governance,” Aberdeen Group, January 2012.

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DIGITAL GOVERNANCE AND COMPLIANCE

for the financial services industry to enhance operational efficiencies to better serve
commercial customers, while at the same time effectively managing regulatory change
across the enterprise. The following chapter explores how EIM technologies are part ofan overall strategic approach for digital transformation and how each component works
together to balance innovation and opportunity with risk and requirements to comply.

ssD
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t
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As

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FIGURE 6.15: Internal Process Controls151

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EIM: BUILDING THE
DIGITAL ENTERPRISE

7

CHAPTER 7

C HAPTER 7

EIM: Building the Digital Enterprise“Enterprise Information Management (EIM) is the key transformational technology for thedigital world.”
We live in a time of unprecedented technological disruption. Recent innovations
ranging from mobile devices, analytics, and social media to cloud computing andthe Internet of Things (IoT) are challenging the established rules of business. What
all these technologies have in common is that they enable a new way of using
information. Information is not just a cost factor—it has become the key to growthand competitiveness. Information is becoming the core component of a corporate
digital strategy.
Information is the new currency in the digital world. It has replaced size, scale, accessto resources, and geographic presence as a key driver of competitive advantage forFinancial Institutions (FIs). Firms that leverage their information to innovate will be theones that succeed.
Throughout this book, we have illustrated how digital information lies at the core ofinteractions, processes, transactions, and experiences. When information is harnessedand protected, the digital enterprise can reach maximum levels of efficiency, impact,
and value while reducing security, compliance, and litigation risks.
Amidst these disruptions and the emergence of a digital economy, the goal for every
firm is to transform itself in order to take full advantage of information and digitaltechnologies—to become a digital enterprise in the digital world. But how can FIs
unlock the power of their information to transform themselves without compromisingproductivity and security? Enterprise Information Management (EIM) is thetransformational technology that helps the digital enterprise thrive in the digitalworld by enabing a new way to work. This chapter explores EIM as an integrated set oftechnologies and outlines an agenda for digital transformation.

EIM: A Platform for Transformation
A digital business is one in which digital technology is both pervasive and central to its
overall success. It is a business that manages its information across its business network
to drive value and competitive advantage, and adopts EIM as its foundational enterpriseplatform for change.
EIM is comprised of a set of on-premises, cloud, and hybrid technologies and practices
that maximize the value of information as it flows across the enterprise. Its core154

EIM: BUILDING THE DIGITAL ENTERPRISE

technologies work together to create an end-to-end platform for sharing, collaboration,
analysis, and decision-making, based on the effective management of information toharness its potential while mitigating risk through governance, compliance, and security.
EIM bundles the following core technologies together to add value as information flows
across the digital enterprise:Content Suite: Enterprise Content Management (ECM) solutions for managing
enterprise information throughout its lifecycle—from capture through to archiving
and disposition—applying secure and consistent governance policies across any type ofcontent. These applications accelerate time-to-value using search and content analytics,
transforming enterprise information into valuable insights that drive innovation andpower customer engagement. Content Suite is available on-premises or in the Cloud.
Process Suite: Business Process Management (BPM) solutions for flexible, agile businessprocess automation and case management systems that enable employees, customers,
and partners to collaborate, streamline operations, and work more efficiently. Process
Suite is available on-premises or in the Cloud.
Experience Suite: Customer Experience Management (CEM) solutions for delivering
responsive, compelling, relevant, and intuitive user experiences across multiple channels
to drive revenue, customer satisfaction, and loyalty. Experience Suite is available onpremises or in the Cloud.
Analytics Suite: High-performing, on-premises and cloud solutions for big data andpredictive analytics that provide an easier way to access, blend, explore, and analyze
data to better understand customers, markets, and business operations without
requiring data experts or additional IT resources.
The Business Network Cloud: Cloud-based Information Exchange (iX) solutions,
Business-to-Business (B2B) integration, Managed Services, and the Trading GridTM for
managing the flow of complex or sensitive information quickly, securely, and reliably—
within organizations or across a network of trading partners.
In addition to the EIM suites, a development platform called AppWorks™ enables users
to create purpose-built applications that assemble and consume enterprise informationfrom across EIM suites in unique and highly customized ways.
This chapter describes each of the core component EIM technologies and services
in more detail. It includes stories about FIs that have embraced EIM to address thechallenges of information and capitalize on its potential. Each story illustrates thetransformational power of EIM.

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Governing Information
Compliance is one of the most significant challenges FIs face. As the governance facetof EIM, Enterprise Content Management (ECM) technologies are designed to help
businesses manage an exploding volume of information and minimize the risks andcosts associated with unmanaged content. Enterprise information is a critical asset
in digital business, yet it carries risk if poorly managed. Access to increasing amounts
of information requires a comprehensive ECM solution that can address demands forbackups and auditing; tighter security; conformity with Dodd-Frank, Basel II, and otherinternational compliance initiatives; data classification (metadata); protection fromthreats of litigation; effective risk mitigation; and e-Discovery technologies.
Content Lifecycle Management

End-to-end management as information flows through critical processes
Applications

Devices

Information GovernanceCaptureClassify

ManageRetainHold

Archive

DisposeEnterprise Archive

Enterprise Disk

Modular Disk SATA/JBOD Disk Optical/Worm Tape

Capacity Tape

FIGURE 7.1: Managing the Full Lifecycle of Content

With a proven records management component, ECM provides end-to-end managementof information as it flows through mission-critical processes. It enables employees andbusiness partners to share and collaborate on documents, control access to them,classify them, and manage versions efficiently.
Many organizations look to their information systems to manage their businessprocesses in the most efficient way possible for competitive advantage throughoperational excellence and innovation. Virtually all business operations have content
associated with them. Within business processes and applications, ECM plays animportant role by ensuring that accurate information is made available, actions oncontent are tracked and audited, and security is maintained.
BPM combined with ECM drives timely decision-making and helps enforce compliancewith corporate policy. The ability to create and work with business processes is built
into ECM. Businesses build processes to review and approve document sets, create andmanage procedures, manage projects and cases, and more.
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EIM: BUILDING THE DIGITAL ENTERPRISE

iPad
9:45 AM
100%

FIGURE 7.2: Enterprise Content Management 1

Reducing Risk with Discovery
As a facet of Content Suite, Discovery solutions organize and visualize all relevant
information to make it possible to find the right information at the right time. The
integrated set of technologies that comprise Discovery enhances an organization’s
capacity to “remember”. The expense and time associated with traditional legal or otherinformation discovery is very high. Having a set of tools available to reduce the data sets
retrieved in a discovery and make them more accurate represents immediate savings forany bank or financial institution.
Discovery solutions break down organizational information silos, integrate informationfrom across the enterprise, and amplify the value of information through better access,collaboration, and content re-use. Business insight is gained by capturing, combining,
and transforming information to identify relationships, risk, and new opportunities for
growth. Improved transparency into outcomes allows for the consistent measurement
and monitoring of performance metrics, arming FIs with the information they need to
improve productivity and the quality of their performance.
The following story highlights how implementing ECM technologies across theorganization has allowed OMERS to evolve into a digital enterprise, leading to greater
insights, better business decisions, higher customer satisfaction, and optimized
business performance.

1Mark J. Barrenechea and Tom Jenkins, “e-Government or Out of Government,” OpenText, 2014.

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I N N O VAT O R S T O R YOMERS“The initial deployment
was such a successthat we have moved
on to transforming
business services andhave future plans toroll the solutions out
in audit, legal, financedepartments, and more.”

FIGURE 7.3: Ontario Municipal Employees Retirement System

ROGER FAVERO, SENIOR VICEPRESIDENT OF TECHNOLOGYSOLUTIONS, OMERSOMERS (Ontario Municipal Employees Retirement System) was established in 1962 toserve local government employees across Ontario, Canada. Today, OMERS represents
982 employers and almost 440,000 members, retirees, and survivors. OMERS manages
a diversified global portfolio of stocks and bonds as well as real estate, infrastructure, andprivate equity investments. OMERS is one of Canada's leading pension funds.
Relationships with customers can span over 60 years, which typically produces volumes of
documents, phone calls, transaction records, etc. OMERS recognized that this paper andthe data it contained represented a huge opportunity. With the right suite of EnterpriseContent Management (ECM) technologies, OMERS could transform its business from amanual, paper-based one into a digital one.
OMERS took a holistic approach to transforming its business. The Company knew it
wouldn’t be enough to simply deploy new technologies, it would also need change existingprocesses and the way its employees work. Backed by executive support, OMERS set
out to drive a cultural shift by educating employees about the evolving digital landscapeand the benefits of technologies. These included enhanced document management andcontent lifecycle capabilities, easier access to information to support collaboration, andthe ability to make better business decisions. A comprehensive ECM system helped to
improve customer engagement and reduce operating costs. And this is just the beginningfor OMERS. The initial deployment in the pension department was such a success that theCompany has moved on to transforming business services and record information, and has
future plans to roll the solutions out in the audit, legal, and finance departments.

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Digitalizing Processes
Process Suite is one of the core technologies of EIM. Whether conducting thousandsof high volume processes per day for case management or running a lower volume ofhigh-value procedures, Business Process Management (BPM) gives FIs greater process
visibility and helps to optimize efficiencies.
Business Business
Rules
Process
Integration Process
Modeling
Workflow
Process
Enterprise Control
Application
Integration
1990

1995

BPMS

Web
Services

BPMS
+SOA

BPMS
+MDD

BPMS
+ACM

Advanced CaseManagement(ACM)
SocialNetworks

MobileDrivenDevelopment
BPMN

2000

2005

BPMS
+Social

2009

2010

BPMS
+Intelligence

Smart
Process
Apps &
Predictive/
Diagnostic
Analytics

Business Intelligence+ Process Mining

2011

2012

2013

Source: Forrester Research, Inc. Smart Process Applications Fill a Big Business Gap, August 2012

FIGURE 7.4: The Evolution of BPM

Enterprise Resource Planning (ERP) systems lie at the core of business operations,managing everything from financials and human capital management to casemanagement, vendor invoicing, and other critical functions. Administrative work, likecase management, forms the basis of many services and produces volumes of data
housed in disparate databases across a business. Data generated by administrative
activities is typically numerical and, in many instances, this information is not easily
accessible. While ERP systems do an admirable job of executing processes and serving
as the system of record, they fall short when it comes to offering process agility andadaptability to changing business requirements. As a result, BPM technology has moved
beyond legacy processes and workflows to allow for the rapid modeling and automationof processes and the ability to easily update them. As illustrated in Figure 7.4, Smart
Process Applications (SPAs) are evolving to support both structured and unstructured
business processes and enable rapid adaptability to exceptions or changing needs.
In a time where customers are increasingly demanding, FIs are constantly challenged
to find new ways to perform tasks more quickly and deliver services faster. FIs candifferentiate themselves by using BPM to digitalize customer processes for new accountopenings, onboarding clients, loan and credit applications, and the transfer of funds.
By making customer transactions easier and faster, FIs can reduce account opening
timelines and loan application abandonment rates, and increase customer retention. In
the insurance sector, for example, BPM helps accelerate claims processing to ensure
renewals, optimize client management to improve the customer experience and loyalty,
and drive operational improvement with new business and underwriting.

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BPM solutions amplify the ability to iterate and innovate critical process capabilities andaccelerate time-to-value for customers in a compliant and auditable manner, permitting
firms to deliver superior customer experiences, faster and without compromise.
In the feature below, Pacific Blue Cross, a leading benefits provider, is using BPM andcase management solutions in the Cloud to automate business processes and increasecustomer acquisition.

Delivering Exceptional Experiences
As one of the foundational suites for EIM, Experience Suite aims to create a richer, moreinteractive online experience across multiple channels without sacrificing requirements
for compliance and information governance.
Customer Experience Management (CEM) powers the world’s highest traffic sites, themost compelling mobile experiences, and the most recognized e-commerce portals on
Earth. Managing the digital customer experience across multiple touchpoints in thejourney, from reading a review or using a mobile app to conducting a transaction, acompelling experience is critical to success in the digital world.

85%

Customer Retention

81%

68%

Customer Satisfaction

Response Time to
Customer Inquiries

65%

Customer Lifetime Value

Percent of respondents indicating as valuable metrics to measure CEM performance, N=252

FIGURE 7.5: The Value of CEM

As discussed in Chapter 4, FIs are dealing with an increasingly sophisticated customer
base—and it’s not just Millennials. Consumers of all ages have higher expectationsof their FIs regarding customer experience, which puts additional pressure on firms
to deliver.

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Pacific Blue Cross“The platform enables
us to be very effective inexecuting our processes
quickly and gives us theflexibility we need tofulfill the demand forour timely services.”
AKIKO CAMPBELL, DIRECTOR,INNOVATION CENTRE, PACIFIC
BLUE CROSSFIGURE 7.6: Pacific Blue Cross

Canadian company Pacific Blue Cross (PBC) has been British Columbia’s leading benefits
provider for over 75 years. Together with BC Life, PBC subsidiary provides health, dental,
life, disability and travel coverage for approximately 1.5 million British Columbians throughemployee group plans and individual plans for those who do not have coverage with
their employers.
PBC was burdened with the manual, paper-based new client acquisition process thatinvolved sharing documents across departments. This siloed approach resulted in multiple
versions of documents, errors, and inaccurate, redundant, and disconnected data—allof which contributed to causing significant delays. PBC needed a solution that would
help them centralize data storage, establish a business process framework, digitalize
taskforce management, and seamlessly integrate with their existing Enterprise Service
Business (ESB).
PBC selected a solution that combined Business Process Management (BPM) and casemanagement technologies in a single platform. PBC is leveraging several of the built-in
capabilities to model, monitor, and improve its processes. Since implementing the solution,
PBC has realized substantial benefits, such as leveraging existing IT (ESB) systems;
minimizing manual, error-prone processes with automated workflows; improving data
quality and reducing redundancy; and providing management with consolidated, real-timemonitoring of critical activities through business dashboards. The transformation froma paper-based process to a digital one has significantly improved PBC’s business agility,
enabling them to set up new customers faster.

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Client acquisition and retention are top priorities for FIs. Firms that deliver targeted
and tailored experiences will be more successful in acquiring new customers andretaining existing customers. In order to deliver relevant, customized experiences, FIs
must turn customer profile information and history into an asset that can be managed
and optimized. CEM helps firms manage client relationships, providing them with theability to treat each customer as a known individual. Using customer information,marketing departments can easily define, create, and launch marketing campaigns thatcan be delivered through each customer’s channel of choice, such as print, web, mobile,
SMS, etc.; call center and line of business owners can leverage customer information
to more effectively cross and upsell; and demands on IT resources can be reduced bygiving marketing teams hands-on ability to adapt pre-approved master templates. CEM
solutions also support strong information governance, including regulatory complianceprograms, through protected information blocks, document audit trails, and archiving.
CEM delivers a consistent user experience across multiple channels. Media, website, andcustomer communications management capabilities combine to empower employees tooptimize brand experiences.

iPad
9:45 AM
100%

FIGURE 7.7: Media Management 22

Mark J. Barrenechea and Tom Jenkins, “e-Government or Out of Government,” OpenText, 2014.

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EIM: BUILDING THE DIGITAL ENTERPRISE

Improving Insight
The availability of big data has unleashed huge potential in terms of gaining customer
insight to inform marketing, product development, and service delivery. On-premises,
cloud, and hybrid content analytics solutions provide organizations with leadingedge capabilities to mine, extract, and present the true value of information forimproved research and analysis. These technologies transform volumes of data into
usable business information to reveal unknown correlations, perform time-series
extrapolations for forecasts on data sets, uncover statistical trends in targeted markets,and gain valuable customer insights quickly—all of which can help FIs accelerate timeto-value, ensure loyalty, and reduce attrition.

iPad
9:45 AM
100%

FIGURE 7.8: Content Analytics 3

Applications for Analytics
Customer satisfaction creates competitive advantage. With analytics applications, FIs
can deliver a personalized experience where customers enjoy self-service access totheir own account data and history. Along with access to information, customers are
given the ability to view and render information visually in different formats and areproactively given recommendations and information about additional products andservices that suit their needs.

3Mark J. Barrenechea and Tom Jenkins, “e-Government or Out of Government,” OpenText, 2014.

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Banks are using analytics applications to differentiate their online services from those ofmany competitors. By merging relevant, targeted information and embedding analytics
into their core online offerings, banks are making it possible for customers to explore
other financial directions while they perform their routine banking tasks.
Many asset and wealth management firms use applications to create and deliverinteractive dashboards in a secure and controlled environment that can be updated inreal time. Dashboards can display historical and current account information, giving
customers a broader understanding of their account activity. Leveraging analytics,
firms can deliver personalized information directly into existing systems and on mobile
devices to increase revenue and reduce costs because the offers made to customers arehighly targeted.
Displaying user trading activity is a basic requirement for securities companies.
Analytics can turn static statements into dynamic, interactive portals that engage
clients. Analytics applications allow securities companies to integrate and display datafrom multiple sources, capture daily transaction activities to facilitate higher value
conversations, and retain data for regulatory scrutiny.
Insurance companies are using analytics solutions to integrate and analyze diverse
data to gain a global view of business, proactively detect product opportunities, predictand prevent customer churn, and standardize best practices to speed up strategic
decision making.
Analytics help deliver a coveted 360-degree view of customers. Leading FIs are using
analytics as a competitive differentiator to provide increasingly tech-savvy customers
with advanced, data-driven interactive reporting and seamless analytics functionality.

Securing Transactions in the Cloud
Today’s volatile marketplace demands that FIs have best-in-class technology, people
and processes to remain competitive and profitable. Decision-makers are being asked toincrease efficiencies, maximize existing resources, and enable transparency across thefinancial supply chain. From banks to insurance providers and credit card processors,
FIs are using cloud-based Information Exchange, B2B integration, the Trading Grid, andManaged Services to support their B2B transaction needs.

Information Exchange
Information Exchange defines a set of offerings that support business conversations
occurring internally among employees and externally with customers and partners,
from electronic faxes and cloud services to large managed file transfers. Information
Exchange has traditionally been an ad hoc arrangement of fragmented systems that
don’t talk to each other, increasing business costs and security risks while slowing downtransactions. FIs need to incorporate Information Exchange into their business strategy
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EIM: BUILDING THE DIGITAL ENTERPRISE

to support accelerated business transactions with anyone, anywhere, in any format,
securely. Integrating messaging on a single platform helps FIs operate more efficiently
by increasing productivity, shortening transaction cycles, and improving customer
service while removing complexity and risk.
There are a number of complicating factors when it comes to sharing information, suchas globalization and increased regulatory pressure. While advances like the Cloud andmobile devices can make Information Exchange easier, security can often prove to be achallenge. Information Exchange solutions help safely move information from where it
is to where it needs to be, regardless of business system or device.

Meet Budget Requirements with
Secure Information Exchange
What you need:
Secure informationexchange with messages,
documents and extremely
large files.

What you have:
Email is unsecureand limited by size.

FIGURE 7.9: Secure Information Exchange

Information Exchange empowers FIs across a business network to control how
information is delivered across the extended enterprise. Data integrity and security
are built in to protect against threats of internal information leaks and cyberattacks.
FIs can execute transactions and share information in ways that are fast and secure todrive value and competitive advantage. More and more financial institutions are turning
to cloud-based data exchanged solutions, like electronic fax and Managed File Transfer(MFT), as a means to securely and compliantly manage their corporate communications
while reducing costs.

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B2B Integration
In the digital world, business operations rely on fast, efficient, secure informationexchange between employees and partners located around the world. B2B integration
falls under the umbrella of Business Network solutions, yet focuses explicitly on
managing information transmitted between supply chain trading partners.
B2B integration is a set of technologies that facilitate the real-time, automated transfer
of information, money, and goods and services, creating an “information supply chain” forthe digital enterprise. It helps a tightly integrated network of employees, counterparties,
and partners to exchange communications, products, and commerce in ways that are
rapid and accurate, and to make decisions that are timely and intelligent.
EDI and integration services give FIs capacity for reliability and reach beyond traditional
Value Added Networks (VANs). These technologies enable transactions while providing
end-to-end visibility into operations for real-time decision making and improved
orchestration of operations.

The Trading Grid
The Trading Grid is a cloud-based B2B integration platform that enables the electronic
exchange of business documents in a secure, fast, and reliable manner. The Trading
Grid helps firms with highly complex supply chains outsource their operations byconnecting partners that use multiple information exchange protocols in accordancewith messaging, compliance, and security standards. Because the Trading Grid iscloud-based, it eliminates the need for traditional hardware and software components
and associated licenses, as well as the time required to purchase the technology andconfigure the infrastructure, providing FIs with an alternative to the time-consuming
and expensive process of building an in-house B2B integration platform.

Managed Services
Managed Services is a hosted B2B cloud service that provides the expertise, technicalinfrastructure, and process support for critical B2B programs that meet current andfuture business needs. Managed Services facilitate activities like mapping, connectivity,
onboarding, testing, monitoring, and end-user support to quickly connect business
partners and resource projects on an as-needed basis.
The potential benefits of B2B e-commerce solutions to increase the speed, accuracy,
and flexibility of operations and improve supply chain visibility are well known, but manyorganizations struggle to achieve them. They find it hard to roll solutions out beyond a
few key business partner, can’t keep pace with changing standards and technologies,
and suffer from lack of technical expertise and local support in the various countries
in which they trade. Managed Services can provide FIs with enhanced agility, increased
speed, reduced risk, and improved Return On Investment (ROI), opening up new, global
business opportunities.
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EIM: BUILDING THE DIGITAL ENTERPRISEManaged Services
Global System Visibility andManagement
Alerting

ERP

ERP
Data and Process
Integration
Intelligence

Customers

Suppliers

Service
Providers
WMS

TMS
Distributors

Financial
Institutions
CustomApplications

Mapping andTranslation

INTERNAL

Partner
Program
24/7 Monitoring
Onboarding Management and Resolution
SupportManaged Services

Third-Party
Logistics

EXTERNAL

FIGURE 7.10: Managed Services for Outsourced B2B Integration

The following feature demonstrates how international FIs with complex supply chains,
like Japan Credit Bureau, are leveraging managed services to strengthen business
partnerships and accelerate time-to-service and overseas business development.

Applications for B2B Integration
B2B applications bring together the right combination of services and technology
to allow FIs to connect and exchange critical financial data in a secure, reliable, andscalable environment. B2B applications can positively impact a firm’s bottom line dueto their ability to integrate with existing ERP systems and leverage legacy platforms.
In addition, B2B applications can help FIs successfully reallocate resources to increasestraight-through processing and visibility of financial transactions.
The following are examples of applications for B2B integration and how they support
financial transactions.

Cash Management
Through a Managed Services platform, FIs can manage the connectivity between
corporate clients’ ERP systems and a bank’s cash management applications. Cashmanagement enables straight-through processing of transactions such as payment
instructions and account statements using a variety of messaging standards including
SWIFT, ISO 20022 XML, SAP IDoc, and EDI. By leveraging a Managed Services approach,FIs can demonstrate measurable improvements in time to onboard new clients andflexibility to support new business.
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I N N O VAT O R S T O R Y

JCB“By being able to centralize
file exchange with B2BManaged Services, wehave improved business
partner satisfaction,
minimized the burden
on our systems
infrastructure, andreduced the time required
to introduce our services
internationally.”
SATOSHI HIJIKATA, INTERNATIONALSYSTEMS DEVELOPMENT DEPT., JCB
FIGURE 7.11: Japan Credit Bureau

Japan Credit Bureau (JCB) is the only international credit card brand that originatedin Japan, and is recognized as one of the few brands accepted around the world. Aninternational leader in the credit card industry since 1961, the mission of JCB is to provide
their customers with unique value through high-quality payment products, a reliableinfrastructure, and world class services. The Company has actively expanded relationships
with card-issuing and merchant-acquiring partners to further increase its card member
base and the number of merchants who accept JCB cards.
As JCB’s partner network expanded globally, increased demands were placed on its
connectivity, data exchange, and file transfer solutions. Requirements to support a varietyof transmission messaging types, such as EDI, increased along with this expansion. In
particular, JCB was looking for ways to onboard and integrate new business partners
more quickly and effectively. They wanted to be able to troubleshoot and solve integration
issues with their partners as they arose.
JCB turned to B2B Managed Services to simplify the complexity of its international B2B
integration requirements. The solution has enabled them to streamline partner onboarding
and centralize file exchange with their partners. As a result, JCB has improved business
partner satisfaction, minimized the burden on IT infrastructure and staff, and reduced
the time it takes to introduce their services internationally. Being able to quickly andeffectively connect with new business partners is helping JCB to accelerate more overseas
business development.

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EIM: BUILDING THE DIGITAL ENTERPRISE

Supply Chain and Trade FinanceSupply Chain and Trade Finance applications allow FIs to gain visibility into the supply
chains of their corporate clients. Numerous banks have leveraged the visibility of open
account transactions to build new and enhanced open account and financial supply
chain products. Time-to-market can be accelerated by leveraging third-party expertisein onboarding of suppliers in emerging markets and mapping of documents such aspurchase orders and commercial invoices.

Commercial Cards
Using a secure, hosted platform for message and file exchange that complies with
the Payment Card Industry; Data Security Standard (PCI-DSS), Commercial Card
applications manage the connectivity and integration with partners, whether they aremerchants, issuers, processors, or corporate clients. Third-party Managed Services canbe leveraged to support a wide variety of use case scenarios, such as the integrationof Level 3 card detail data with corporate accounting applications in the commercial
card segment.

Insurance Group Benefits
Insurance Group Benefit applications manage the connectivity with the humanresource systems of corporate clients and the processing applications of Third-Party
Administrators (TPAs). These applications automate the exchange of employee census,
reconciliation, and billing files to support Group Disability, Group Life, Employee
Absence Management, and other group benefits products. By leveraging a Managed
Services approach, FIs can demonstrate measurable improvements in time to introduce
new products and flexibility to bid on new sales opportunities.

Securities
Through Managed Services, FIs can manage the connectivity between brokers anddealers, investment managers, global custodians, and centralized depositories. Securities
applications enable straight-through processing of equity, fixed income, mutual fund,foreign exchange, and derivatives trading and enable asset servicing activities, such as
corporate actions and account reconciliation. In addition, securities applications ensure
FIs comply with ISO 15022, ISO 20022 XML, FIX, and other popular securities standards.
Leveraging securities applications helps firms satisfy customer-specific integrationneeds, reduce time-to-revenue, and enhance international connectivity offerings.

Applications for Financial Services
Financial institutions are facing challenges from increased regulation, ongoing economic
uncertainty, lost revenue from low interest rates, risks, constant revenue and profit
pressure, changing technology, and new competitors. Customer expectations arechanging rapidly as technology enables real-time commerce and financial activity and169

CHAPTER 7

regulatory challenges are accelerating globally. The entire financial services industry
is under tremendous pressure to meet these challenges while increasing profitability.
To address these challenges, FIs are implementing EIM solutions that contribute torevenue growth, facilitate compliance and security, improve transparency, increasecustomer satisfaction, and automate processes to grow profitability, as illustrated in thefollowing feature about Hawksford Group.
Applications for financial
following processes.

servicesarehelping

leadingFIs

streamline

theClient Onboarding
The onboarding process is often a client’s first experience with a financial institution.
Client onboarding solutions can automate and simplify the onboarding process, while
capturing and storing data for future use for upsell and cross-sell opportunities.
Removing paper and manual processes prevents delays and frees up internal resources.
Automation also ensures that compliance issues are addressed and confirmed.
By shortening the client onboarding process, clients are able to start conducting
transactions sooner and FIs can accelerate time-to-revenue.

New Client Acquisition and Targeted Marketing
It's no secret that customers prefer and respond well to personalized treatment. A
results-based customer communications solution is a critical factor in building effective
consumer relationships. Leading FIs are personalizing content to deepen relationships
with existing clients and to cross- and upsell more effectively. Using new clientacquisition and targeted marketing solutions, FIs can conduct multichannel campaigns
driven by marketing without IT involvement to ensure that anything the customer
receives—at any given touch point—is relevant and tailored to the customer’s current
status. Personalized communications help FIs maximize the value of every interaction.

Claims Processing
Claims processing can be a frustrating and arduous experience for customers. The
benefits of faster claims processing are many. Clients are happier and more likely torenew. Automation eliminates manual efforts and the handling and storing of claims
associated with paper-based processes. Agents can be more productive, allowing fewer
people to handle more claims. Processes can be added or deleted to further streamline
and simplify tasks and improve both the client and agent experience. Together, thesebenefits add up to reduced costs and increased productivity for insurers and an
improved experience for customers.

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I N N O VAT O R S T O R Y

Hawksford Group
Process automation
has enhanced
employee performance.
Client billing—whichused to take two days—
now takes less than
two hours, resulting
in improved customer
service.
FIGURE 7.12: Hawksford Group

Hawksford is an award-winning and international provider of corporate, private client andfunds services which consistently delivers impeccable service and is focused on thinking
beyond tomorrow. Headquartered in Jersey, Hawksford’s clients range from small andlarge corporates to ultra-high net worth individuals. The business places importance on
investment in state-of the-art technology to ensure its processes and systems allow them
to offer flexible and consistent client service across international offices. Hawksford has adiverse and international service offering; a broad client base from over 20 countries witha broad spread of revenue across jurisdictions; and a strong year-on year growth story.
Operating in the complex, highly regulated financial services industry, Hawksford
generates, receives, and manages a range of content-driven processes. Following theMBO (Management Buyout) of the business in 2008, Hawksford wanted to digitalize
these processes to align with their people-focused strategy. Many of the processes werestill heavily paper-based. Not only was this inefficient, but it took considerable time tolocate documents or they were unnecessarily duplicated. Keeping track of processes wasdifficult and this impacted customer service standards and Hawksford’s ability to comply
with regulations.
Today, many processes, such as client billing, are benefiting from digitalization. Process
automation has reduced client billing from two days to less than two hours. As Hawksford
grows, it is now able to take on more workload without requiring extra staff. They havealso eliminated much paper from their processes, saving on physical output and storage.
Hawksford is saving 10 minutes on each bill produced. A bill that requires no changes
can be sent to a customer in three minutes. An extensive audit trail of changes made to
the content gives Hawksford transparency into their processes and helps them meettheir compliance needs. Feedback with the staff shows that 82 percent feel that process
automation has enhanced their performance, resulting in improved customer service.
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CHAPTER 7

Client Management
FIs are looking to optimize the customer experience, improve customer loyalty,
and reduce the operational costs of managing customer and adviser interactions.
To accomplish this, personnel need the right information at the right time to resolve
cases quickly and efficiently. However, many core customer service systems are
disconnected and don't deliver a true 360-degree view of a customer. A comprehensive
client management application can help firms configure processes to keep pace withmarket and regulatory changes; improve customer insight with a consolidated historyof customer interactions; accelerate decision making by leveraging mobile, social, andadaptive case management technology; and improve visibility with preconfigured,customizable reports.
The following feature illustrates how First United Bank and Trust is using process
automation to gain better insight into client process status and performance while
improving internal collaboration and customer satisfaction.

New Business and Underwriting
New Business and Underwriting solutions allow insurers to avoid costly rework, anddissatisfied clients and agents, while getting business on the books faster and with lesseffort. Client contacts and information are managed and tracked in one place to provide
agents with a single view of the customer, improving agent productivity and acceleratingtime-to-value, and can help create new channels for sales, allowing agents to sell moreproducts. New Business and Underwriting solutions enable FIs to drive operational
improvements for significant bottom-line impact.

EIM: Bringing It All Together
The core sets of technologies and services described in this chapter form acomprehensive platform for EIM that delivers better business results, improves
relationships with customers, and creates an open, compliant IT infrastructure forbusiness success.
In a digital economy, firms must reduce cost, improve efficiencies, and increase theircompetitiveness by automating information processes. To meet the requirements of a
new workforce and digital consumers in a disruptive world, they need to consolidate andupgrade their information management platforms. And they must increase the speed of
information delivery through integrated systems, within and beyond the boundaries ofthe enterprise. EIM helps FIs achieve all of the above, giving them the ability to create abetter way to work in the digital world.

172

I N N O VAT O R S T O R YFirst United Bank and Trust“The Company has
automated a number ofprocesses and converted
over 2.5 million documents
and images into digitalformat for considerable
business improvements,
including overall growthand customer satisfaction.”
BRYAN WANDEL, DIRECTOR OF IT,
FIRST UNITED BANK AND TRUSTFIGURE 7.13: First United Bank and TrustFirst United Bank and Trust is one of the largest privately held community banking
organizations in the southwest United States, with assets of more than $3 billion and 650
employees serving approximately 75,000 customers in 41 banking centers and mortgage
offices in 30 communities across Texas and Oklahoma.
First United acquired several banks over a six-year period. While this represented
tremendous growth for the Company, it also presented enormous challenges. As well as
consolidating systems, First United inherited the paper-based and error-prone processes
that supported current business operations. These processes, such as new accountprocessing and loan approvals, were impacting the bank’s ability to deliver the high-quality
customer service it is known for. Manual processes also made it difficult to unify business
operations while meeting strict government regulations and compliance guidelines. First
United realized that it needed a case management and BPM platform to improve end-toend processes and manage growth.
Since implementing the BPM solution, First United has automated and streamlined anumber of processes and converted over 2.5 million documents and images into digitalformat. Electronic forms for new account opening are now entered directly into a
consolidated database, so customers can conduct transactions immediately—a big
improvement from the 24 hours or more that this previously took. Relating independent
documents across the enterprise allows employees to collaborate and provides visibility
into each case, so staff can resolve problems as they arise. In addition, the solution provides
full analytics capabilities and executive dashboards, giving management instant process
analysis of even the most complex business scenarios. The BPM solution has helped First
United achieve its goals of going paperless, unifying processes across the organization andimproving visibility to deliver better customer service, all on a dynamic platform that scales
to support future changes in market conditions and government regulations.
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CHAPTER 7

An integrated EIM strategy will deliver better results, relationships, and IT infrastructure.
Business Results

Customer Relationships

Revenue

Cost Reduction

Customer Insight

Productivity

Decision-Making

Improved Customer
Rentention

IT Infrastructure
Data AccessComplianceStandardization

FIGURE 7.14: The Business Value of EIM

The priorities for change are clear: to effectively manage unstructured information
and business processes; to automate B2B transactions that power business networks;
to ensure security and privacy through information governance, compliance, and risk
management; and to make access to information available from any application or
device—on-premises or in the Cloud. The most successful FIs are already embracing
disruption and digitalizing their operations for sustainable competitive advantage.
The time for change is now. As they start on a multi-year journey toward digitaltransformation, businesses are looking to IT for leadership. To help articulate visionand execute on a plan for digital re-invention, strategic leaders will need to work
together to implement change across the enterprise. The next chapter explores change
management strategies to help executives transform their FI into a digital enterprise tolead and succeed in the digital world.

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STRATEGIES FORCHANGE MANAGEMENT

8CHAPTER 8

C HAPTER 8

Strategies for Change Management“The biggest barrier to innovation in digital engagement is not technology but culture and lackof imagination.”1
In the digital world, Financial Institutions (FIs) that fail to evolve will become irrelevant
and potentially obsolete. As outlined in this book, success requires a radical overhaulof enterprise strategies, processes, products, services, and relationships. To empowerFIs, the C-suite will need to break out of operations mode to better align themselveswith the business, embrace future trends in technology, and identify new value streams.
Visionary leaders will apply the technologies described throughout this book to reengineer and digitalize old business models.
To stay competitive, the enterprise must reinvent itself in a business landscape thatis disrupted by technology. To maximize transformation, firms will need to create anenvironment in which innovation thrives. As customer requirements change, newtechnologies will emerge and continuous innovation will be critical for survival. To
attract and retain customers, business and technology leaders should be ready totake risks, follow digital strategies with effective leadership, and define new models of
engagement. And they must be ready for a substantial shift in culture built on openness,innovation, and trust. Business problems will need to be examined and new processes
created to solve them fearlessly and with imagination.
As innovators continue to disrupt the financial industry, FIs will restructure IT toaccommodate the fast pace of change. This transformation will require a pervasive shift
throughout the enterprise to digitalized tools, processes, and information to createcustomer value and competitive advantage. Managing and harnessing information isessential to driving an agenda for innovation and growth.
EIM is a fundamental enabler of digital transformation based on an integrated
infrastructure that delivers secure information and services. An effective EIM strategy
is guided by processes, principles, standards, and effective transformational leadership.

1

Malcolm Turnbull, “Australian Minister Calls for Innovation in Digital Media,” FutureGov Summit Australia, December 2013.

176

STRATEGIES FOR CHANGE MANAGEMENT

Transformational LeadershipTo achieve digital advantage, businessleaders will be called upon to motivate
their companies around a strong, unifying
vision articulated through an achievable andwell-governed digital strategy. Typically,
executives build their visions based on
operational effectiveness (inside-out) or
superior customer experiences and sales(outside-in). Centralization and digitalization
are integral to both approaches. 2

C R E AT I N G A
BUSINESS CASE

Transformational businessleaders need to establish
a business case for digitaltransformation. What will the
pay-back period be for the
project? Most projects do
not move forward without ascrutinized business case. A
business case should be basedon existing processes, industry
best-practices, and the positive
impact an EIM solution canhave on performance.

A business case should link your businesschallenges to a strategic driver or businessgoal. Most organizations have existing
performance goals and objectives. Thesemay be defined as Management by Objective(MBO) or as a Balanced Scorecard. Defining
goals presents an opportunity to identify
the processes that will directly influenceobjectives and demonstrate how improving
the processes can improve overall businesssuccess. The ability to align process improvements directly to corporate objectives
provides a clear and effective framework for illustrating business value and gaining
executive sponsorship.
The operations of any business could not be achieved without strong leadership based ona coherent strategy. A strategy accounts for cultural shift and technology infrastructure
challenges while supporting engagement across departments, partners, suppliers, andcustomers. A transformational leader has to overcome outmoded structures and oldmanagement styles to empower Millennials to self direct, make decisions, experiment,
generate ideas, and take risks.
In order to build a digital business strategy, executives need to shift their focus awayfrom cost efficiencies and tactical operations to providing value for the company throughinnovation, developing new products and services, and overall business growth.

2“ The Digital Advantage: How digital leaders outperform their peers in every industry,” Capgemini Consulting and the MIT
Center for Digital Business, 2012.

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CHAPTER 8

Enabling the Digital World: The Way Forward
The enterprise infrastructure of the future will be holistic and expansive to include
an extended business network and digital value chains. The IT ecosystem will beconsolidated and processes improved to support superior customer experiences andemployee productivity. Under a strategic leader, IT will optimize access to technology
across devices, applications, and systems. Creative leadership and strategy will be thefocus. As part of a digital strategy, FIs will use technology to: Meet the challenges of digital disruption
 Align business with technology
 Implement systems of engagement
 Develop agile processes
 Empower executives, users, customers, partners, and suppliers Build capacity
 Focus on information as an asset

Meet the Challenges of Digital Disruption
Current IT spend is shifting. Although global investment has been conservative (at4.1 percent in 2014 3), leading organizations place a greater importance on digitaltechnologies like cloud computing, mobile, data analytics, and enterprise social
networks. While certain technologies are seen as critical to business operations, amajority of organizations have identified e-commerce and data analytics (54 percent
and 53 percent, respectively) as critical to their business in the coming years, especiallywith regards to increasing efficiency, improving customer experience, and attracting
and retaining top talent.4
The same report finds that 70 percent of companies surveyed plan to use disruptive
technologies like smart machines and automation to drive process efficiencies, while
45 percent will use them to find new revenue by expanding sales, opening new sales
channels, or creating new products and services. 5
In the digital world, digital technologies will force organizations to explore new ways
to engage with customers, create new products and services, and accelerate time-tomarket. This moves beyond merely digitalizing processes and, in many cases, will requireradical shifts in core competencies, especially in IT. Strategic leaders will need3

 arc Ferranti, “IDC cuts IT spending forecast on mobile slump, emerging market uncertainty,” PCWorld, May 16, 2014,M
http://www.pcworld.com/article/2156520/idc-cuts-it-spending-forecast-on-mobile-slump-emerging-market-uncertainty.html(accessed August 2014).

4M urray, Sarah, “CEO Briefing 2014 - The Global Agenda: Competing in a Digital World,” Accenture, 2014.

5

Ibid.

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STRATEGIES FOR CHANGE MANAGEMENT

to position their IT, support, and marketing organizations in relation to emerging
digital technologies.
How important are investments in digital technologies (such as cloud computing, e-commerce, data analytics,
machine-to-machine communication, social and mobile) to the following areas of your business?
Grow sales

20%

Improve the customer experience

24%

Open new sales channels

19%

25%

30%

Create new products and services

18%

28%

31%

Improve management control, oversight, and governance 17%

27%

Attract and retain the best talent
Improve the efficiency of our operations

25%

31%

37%

21%

13% 2%
0%
5%
21%
0%
5%
17%
0%
5%
22%
1%

24%

28%

39%

35%

26%

35%

Moderately
ImportantSomewhat
Important

11% 3%
0%

22% 7% 1%
1%
100%

0%
Extremely
Important

4%
1%

20%

Slightly
Important

Not at all
Important

Don’t
Know

FIGURE 8.1: Importance of Investment in Digital Technologies 6

Front-line and back-office employees will need to be empowered with the technologies
that digital consumers are using to make their jobs easier and more efficient. This
will entail monitoring advances in emerging technologies, along with the information
they produce in order to operationalize the technology. As mobile, smart devices, andanalytics become ubiquitous, processes will have to evolve to support them. Technology
will continue to force FIs to adopt new business models quickly and partner oroutsource for capabilities such as non-core business processes or system development
and maintenance. Digital leaders will be required to research and build partnerships
with startups, technology vendors, developers, and whole ecosystems. Visionaries
are already looking beyond the firewall to crowdsource financial services solutionsin hackathons or innovation labs. In an intensely competitive landscape, the speed ofbusiness will call for faster times to innovate—and this will all be driven by technology.
As disruptive technologies become part of the IT infrastructure, firms will grapple withinformation security as a growing challenge. Other challenges for integrating disruptive
technologies into the enterprise architecture include the education, training, and skills
needed to run these technologies. In a recent study, 42 percent of executives identified
change management and 35 percent cited skills shortages as the biggest barriers
to implementing digital technologies.7 Overall, investments in digital technology
are becoming a priority in many organizations with a recognized impact on enabling
opportunity and innovation.
6M urray, Sarah, “CEO Briefing 2014 - The Global Agenda: Competing in a Digital World,” Accenture, 2014.

7

Ibid.

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CHAPTER 8

Align Business with Technology
The relationship between business and IT will undergo radical changes in thedigital world. As business applications are outsourced to the Cloud and easier tomanage, IT skills will become decentralized and incorporated into departments. This
will fundamentally change the relationship between the business and IT groups.
Digital technologies will drive these changes and the digitalization of informationcentric processes across the enterprise. Line-of-business (LOB) leaders will become
empowered to manage their own solutions. FIs will facilitate these changes byimplementing strategies for digital process transformation.

y Alignme
ateg
nt
Str

oc

ie

nt

es

Or

sD

es

rive nS ervic

Integration&
Implementation

Pred

FIGURE 8.2: Aligning Across Functional Boundaries

To transform the financial enterprise into a digital enterprise, IT leaders will need tobroaden their role beyond the IT function to strategically align with other businessexecutives. Expanding their role will require making changes to leadership skills, the IT
organization, enterprise technologies and architecture, and IT skills and talent. Successwill be based on effective collaboration with business units and executives to deliver on
corporate goals. Only when the front end is connected to the back end—across people,
processes, and information—will firms be able to map out the customer journey andeffectively develop and market new products and services.

Implement Systems of Engagement
Over the last 30 years, FIs have been focused on automating processes and transactions
in systems of record with Enterprise Resource Planning (ERP) systems. For the next 30
years, their attention will shift to automating processes and transactions for unstructured
information in systems of engagement with EIM. As FIs move from governing systems ofrecord to enabling new systems of engagement, leaders will articulate a digital strategy
that balances innovation and growth with security and risk.
180

STRATEGIES FOR CHANGE MANAGEMENTEnterprises are already evolving from systems of record to systems of engagement.
Systems of record are the ERP systems that run an organization’s business (financials,
human resources, etc.). As records, data has to be accurate, accessible, and integrated.
Systems of engagement are systems that engage employees and include social networks,
collaborative technologies, and learning systems. Systems of engagement are digitaland interactive and support the digital enterprise in the digital world. For richer anddeeper engagement with customers, employees will need to be given access to thesame self-service tools and targeted information that consumers use to collaborate
and communicate. Social networks, mobile devices, analytics, and portals will help todeepen engagement across channels, provide richer insights about customers, andsimplify collaboration.
Collaborative EIM technologies facilitate the free flow of ideas and the exchange ofknowledge. To truly transform, FIs will have to create networked environments basedon new engagement models to empower all stakeholders across the financial supply
chain. If employees are engaged, motivated, and unified under a consistent vision, they
are less resistant to change. New engagement models often lead to a richer exchangeof ideas and opportunities. In the digital world, cross-functional collaboration will be
critical. Effective collaboration helps to eliminate information and process silos. Business
units are more inclined to engage with IT to adopt new technologies and advancetransformation. Externally, relationships are complex and difficult to manage, yet
digital engagement models offer a way to apply resources to projects that are beyond anorganization’s firewall, network, and scope. This dynamic requires a substantial change
in culture and governance.

Facilitate Agile Process Development
In the digital world, IT will have to adapt to business models with new processes that
support dynamic, mobile, and real-time customer transactions. This will fundamentallychange business processes, which will have to move beyond departmental silos tosupport customer-centric processes. New, information-based business models thatalign with online and mobile channels will improve productivity and efficiency andreduce the costs associated with face-to-face engagement. Agile process development
and dynamic processes like case management will enable the digital enterprise to be
more nimble and focused. Processes will move beyond packaged applications to EIM
and Business Process Management (BPM) tools that are cross-functional, dynamic, easy
to change, and repeatable.

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CHAPTER 8

Human Resources

Accounting

MarketingLegal

Call Center

FIGURE 8.3: End-to-End Process Agility

R E C O M M E N D AT I O NWhen building a business case for process automation, it’s critical to align theprocess improvements to business drivers and goals. Think beyond this single
project and look at the big picture to ensure that your project is included in larger
strategic projects in your business—often with pre-assigned budget and resources
to help kick-start your project. Consider the complete buyer-journey, the entire
customer lifecycle and how it fits into your customer experience strategy. Choosea business process platform that can be extended beyond its immediate use as you
consider the long-term, ongoing business benefits.
For example, if implementing a client onboarding or case management solution, youwill want to identify improvements in the process that will: Accelerate order-to-cash flow by winning new clients, faster Increase revenue by cross selling more, faster Reduce operational costs by automating manual processes Decrease loss by reducing new client abandonment
 Reduce churn by improving client satisfaction and loyalty
 Increase productivity by freeing up staff and management time Reduce risk by more easily demonstrating compliance Improve quality control by standardizing on the global best practices

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STRATEGIES FOR CHANGE MANAGEMENT

Transformed processes build upon systems of record and integrate with customerfocused technologies using Smart Process Applications (SPAs) and Dynamic CaseManagement (DCM). Effective technology leaders can add strategic value by driving
the development of next-generation processes. EIM can be used to rapidly create newprocesses that support customer service—within hours—without requiring IT support
or software development skills. By combining well-structured modules with prebuilt components, an application-factory approach allows an LOB manager to build
new processes easily. Alternately, an existing process can be used as a template andmodified to suit business needs across customer service. This means that employees
can be creative in anticipating service requirements and designing ways to address
them. An on-demand environment is supported by a flexible EIM infrastructure, newtechnologies, and the ability to re-engineer evolving customer processes and services.

c

Customers

e
pris
ter
En

os

Bu

to

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ite

ch

ar

t

20

t
ec

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202

0

ss

ar

tu

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ss

ine
bus

ine
bus

hi

20

Leading

ec

hit

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hi t

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bus

Lea d in gState of

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ise
pr

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ness
Busi work
Net

Bus
ine
ss
Un
Sta te o f bitu si n
e

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od

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da

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old
eh
ak

En

ed

Par
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rs

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A

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hi

end

Ar

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Ext

e
tur

FIGURE 8.4: The Extended Enterprise

Many traditional FIs have core processing systems that were implemented preInternet and before mobile devices became ubiquitous. In the digital world, FIs will betransformed through the consolidation of technology onto platforms that allow for
rapid application development of next-generation products, replacing developmentthat moves at the speed of “zero-fault” tolerance. Continuous iteration, rapid featureenhancement, and short-term solutions will be developed as cheap, fast, and scalable
pilots, replacing longer deployment cycles and the IT backlog that hinders the ability tocapitalize on new opportunities.
In the following feature, Sympany has created a digital mailroom, replacing manual
processes with automated ones to save money and deliver superior customer service.

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I N N O VAT O R S T O R Y

Sympany“Thanks to the solution,
the processing time forservices has been halved.
This has enabled us toachieve a significant
increase in customer
satisfaction.”
CHRISTIAN SCHUCH, LEITER IN-/OUTPUT
MANAGEMENT AT SYMPANY
FIGURE 8.5: Sympany

Sympany has been providing health and accident insurance for individuals and companies,
as well as property and liability insurance for over 100 years. Headquartered in Basel,
Switzerland, the Company’s 470 employees serve 224,000 private clients and 9,300
corporate clients. In 2014, Sympany generated over CHF 23.6 million ($25.2 million U.S.)in net profit.
Sympany grew out of ÖKK Basel and the acquisition of other health insurance companies
and, as a result, inherited a number of applications. At one point, more than 130 businessapplications were being used, and many of the acquired companies continued to use theirrespective mail processing systems. This made handling the three to four million documents
the Central Mailroom (CM) sorts each year very time consuming and inefficient. Sympany
needed a single platform solution for mail processing to simplify and accelerate the sorting
process and bring together information across the company to improve the quality of data.
Implementing an advanced document capture and character recognition solution has
allowed Sympany to introduce a digital mailroom. Using Optical Character Recognition(OCR), the system automatically classifies documents and extracts data to populate preset
data fields. The system can distinguish between more than 100 document classes—such as
forms, reports, doctor’s bills, laboratory bills, and informal letters from customers—which
has improved data quality. A centralized platform makes it easy for Sympany to accessinformation across the company, so it can plan better in advance, identify bottlenecks
before they arise, and optimize processes. In addition, costs have been vastly reduced—
up to five mail processing systems that required ongoing maintenance were replaced by asingle platform. Accelerated sorting processes have decreased the amount of time required
to settle claims by 50 percent, resulting in a dramatic increase in customer satisfaction.
A digital solution has replaced manual processes to streamline processing, improve data
quality, save money, and ultimately provide superior customer service.
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STRATEGIES FOR CHANGE MANAGEMENT

Empower the Digital Enterprise
In the digital world, spending on cloud software, platform, and infrastructure services
will grow from approximately $28 billion today to $258 billion in 2020—reaching 45
percent of total IT services spend. 8 As infrastructure moves to public or private clouds,
the demand for IT to implement and maintain systems will be reduced. Software-asa-Service (SaaS) will become the norm and IT will increasingly be seen as a “broker”
of technologies, providing consulting services to employees and customers who are
driving technology decisions. As services move to the Cloud, FIs will have more timeand resources to focus on digitalization and empowering end users through self-service
applications and Bring-Your-Own Device (BYOD) policies.
Agile and process-driven teams will replace the current structure of IT, no longer
confined to organization around siloed technologies like servers, storage networks,
desktops, and departmental systems. To add value to the enterprise, IT will haveto remove the shackles of legacy systems and their associated operating costs andinflexibilities and open up to the possibilities of co-creating solutions.
The trend toward the consumerization of IT will continue as individual users andconsumers drive product and service design. The digital enterprise will focus ondeveloping mission-critical apps and making these available from an architecture thatallows for the development of mobile apps and distribution in a private cloud. In essence,
every firm that maintains a firewall and a proprietary repository of content could createa private cloud apps environment. EIM makes this infrastructure possible by providing
a set of integrated tools for managing process and information applications, while
guaranteeing security and privacy.
Tech-savvy employees and customers will become self-sufficient. IT departments will
struggle to control the corporate use of consumer-oriented technologies, but resisting
this trend will impede digital transformation. In fact, many workers today use consumer
technology to address business requirements and often have better technology athome than they do in the office. IT will be required to match or exceed experience with
consumer technologies like social networking and mobile apps. Digital leaders will
embrace the social revolution to move at the “speed of the customer”.
Consumer-oriented technologies are far easier to access, use, and manage thanmany enterprise systems—giving employees the confidence they need to use mobile
apps, social networks, and cloud computing to do their jobs. Employees are alreadycircumventing IT to work more efficiently. In the digital enterprise, everyone will bean IT expert to some degree as technology becomes core to the business. Flexible IT
portfolios will support the business using enterprise apps, BPM solutions, DCM, SPAs,
social media, collaboration, and mobile apps.
8J ean-Pierre Garbani, “Prepare For 2020: Transform Your IT Infrastructure And Operations Practice,” Forrester Research,
October 24, 2013.

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Security andGovernanceEnterprise App StoreBusiness
Data

Business
Apps

Cloud
Apps

OnlineData

User Experience

Web OS Integration
FIGURE 8.6: App Store Infrastructure

The IT department will be required to optimize workforce experience through anytime,
anyplace access to tools and information. They will need to accommodate demographics
and a changing workforce with technologies that support the way they work. A good
portion of the workforce will be remote: a recent survey of business leaders found that
34 percent said more than half their company’s full-time workforce would be working
remotely by 2020. A full 25 percent cited that three-quarters of their workforce would
not work in a traditional office by 2020.9 To meet the needs of a remote workforce, FIs
will need to mobilize access to information and processes to accommodate these users.
In the digital world, the IT landscape will become more multidimensional and complex—
based on new business models, shifting corporate strategies, industry transformation,organizational changes, skill shortages, a multi-generational workforce, and digital
disruption. To generate value for the business, FIs will have to determine if current
IT activities and projects contribute to the digital strategy and corporate objectives
for growth. To master an infrastructure in flux, business leaders will have to examine
current processes, explore new business and engagement models, and embrace digital
disruption—while maximizing security and minimizing risk. It’s a tall order, but witha sound EIM infrastructure in place, firms are well equipped to digitally transformthe enterprise. In the following feature, insurance company Metrópolis Seguros
demonstrates its commitment to a transformational, innovative approach, as reflected
in its product range and business activities.

Build Capacity
To successfully transform, FIs will have to coordinate their initiatives and assign the rightresources. Visionary firms will attract and build capacity by bringing together people
with highly specific skill sets to collaborate on projects. More effective human capitalmanagement will be required, specifically by offering ways for employees to develop theskills required by future business models. This will also improve overall performance.
9L aura Vanderkam, “Will Half of People Be Working Remotely by 2020?” Fast Company, August 14, 2014.
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I N N O VAT O R S T O R Y

Metrópolis Seguros“We eliminated complexity,
provided an efficient service to ourusers and customers, and reduced
maintenance and development
costs by over 50 percent.”
FERNANDO RAMÍREZ, HEAD OF STRATEGY,METRÓPOLIS SEGUROSFIGURE 8.7: Metrópolis Seguros

Metrópolis Seguros is a Spanish-owned insurance and reinsurance company that has been
operating for over 70 years in the national insurance market. With over 100 employees, 11branches, two sales offices, and 14 branch offices, it is one of the most reliable companies
in the Spanish insurance market. Its innovative philosophy can be seen in both its productrange and business activities, which include a dedication to digital innovation in its servicesbased architecture.
In the 1990s, in accordance with the regulations and to deliver exceptional customer
service, Metrópolis developed a process management system called PRIMAS. Metrópolis
was challenged by the dramatic growth in volume of paper-based information it was
required to manage. To comply with regulations and governance policies, Metrópolis
needed to manage sensitive customer information in a flexible, compliant, and efficientway, while accurately linking the information with the corresponding files, policies, andprocesses managed on PRIMAS. The Company needed a content management solution to
help optimize processes and provide an interface that linked processes and content.
By integrating its existing process management system with a new content management
solution, Metrópolis now has a flexible system in which a claim can be created or found—along with all relevant, linked documentation. Employees can now easily search for andretrieve all documents related to a client or case, dramatically reducing client response
time. Adoption of the solution was effortless, given its native integration with existing
systems like PRIMAS. As a result, Metrópolis was able to roll out the first version of thenew, fully integrated application after only two months. The solution’s versatility andflexibility allows Metrópolis to manage its clients’ documentation and work internallywith project documentation and emails. The Company was able to replace its obsolete
file access system, eliminating a continuity risk, and resulting in a 50 percent reduction insystem maintenance costs. Based on the success of this project, Metrópolis has decided to
expand the solution to include the integration of all business processes by the end of 2015.
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Another way to improve capacity is to aggressively recruit and attract those with therequisite skill sets. This is achieved through creating and maintaining a culture that both
attracts and retains talent while supporting underlying values for multiculturalism,
corporate responsibility, and career development. In the digital world there will be
an increasing demand for the skills needed to accurately analyze and extract insightsfrom customer big data. As a result, entire departments could be designated to manage
customer insights, requiring headcount and budget for customer data analysts. Firms
will have to determine where their skills gaps lie, and either hire to fill these gaps or train
and certify current staff to expand capabilities.
Building up communities of practice, promoting collaboration using corporate social
networks, and allowing employees to bring their own devices into work and work
remotely are ways of creating a workplace that is attractive to an evolving workforce.
Investment in digital education programs for executives helps to promote digital as core
to overall growth and success—and aids in the trickledown effect in communicating thedigital strategy as an enterprise-wide directive. New team goals, performance plans,
and incentives will have to be defined. The adoption of digital technologies will aid inbuilding capacity. The 2020 workforce must be empowered to harness the potential of
digital technologies and apply these to transform the business.

Focus on Information as an Asset
Future enterprise infrastructures will have to expand to support and incorporate theentire business network. Information and process integration will increase the speedof business. New processes will be deployed on-premises, in the Cloud, and to support
mobile apps. FIs will have to expand their function beyond the firewall to deliver
value and business growth. Enterprise architecture will have to extend to incorporate
new business models based on the needs of employees, customers, and partners
and counterparties.
An enterprise architecture provides a framework for organizational change and includes
plans for transitioning to future business models. Before resources are committed to
implementing change, an enterprise architecture identifies capability and risk, outlining
the ways in which data and information can be integrated with services effectively.
Data integration—a critical enabling capability for transformation—must be reliable,
secure, and accessible. Data integration connects operations and analytics to unify
the enterprise. Enterprise architecture helps to ensure the interoperability of systems
and the sharing of information resources across agencies. As an integrated suite oftargeted functions, EIM supports digitalization, data integration, customer experiencemanagement, secure information exchange, and records and information management.

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STRATEGIES FOR CHANGE MANAGEMENT

EIM combines systems of engagement with systems of record. Managing thesesystems of record will remain a critical function of the digital enterprise. The high-techindustry has spent considerable time and effort developing the solutions needed tosupport transaction-oriented processes that produce structured information. Part ofa progressive IT strategy will focus on consolidating these fundamental technologies.
EIM delivers the backbone required to streamline information-centric processes andsecurely support fully integrated customer experiences across many channels.
EIM helps to minimize and control risk. It enables FIs to manage disruptions caused
by a mobile workforce, unstructured data, cloud computing, social media, and theproliferation of devices. EIM systems can deliver benefits such as better data accessand analysis, consolidation and standardization, security and risk management, costeffectiveness, and better alignment of IT activities with business objectives. But EIM
does more than this—it provides a secure context in which innovation can happen.

EIM: Strategic Information Management
In a digital economy, FIs will be responsible for empowering users with informationthat is usable. For this to happen, organizations need to be able to access, manage, andprotect their information—and make it actionable for a wide range of stakeholders.

R E C O M M E N D AT I O NWhen implementing a transformational strategy, a good first step is to takeinventory of current enterprise information assets. This includes the following: Fragmentation - How many disconnected sources, flows, and archives do you

have?
 Velocity - Which information processes do you need to accelerate?
 Variety - What kind of information, media, documents, and discussions are you

most concerned with?
 Volume - How much information are you talking about?
 Security - What kind of information security risks are most threatening to yourorganization?
 Governance - How are you ensuring that your digital efforts are coordinated,

efficient, and moving in the right direction?
 Compliance - Which legal or regulatory requirements and risks exist in yourcompany and your industry?

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Efforts need to be prioritized and targeted—and linked to an articulated business case.
Prioritization should align with the executive team’s top business objectives, whether
they are productivity, cost reduction, revenue growth, innovation, competitiveness, orgovernance. The objective that benefits most significantly from improved information
management should be identified. These business needs are the pilot projects for
effective digital transformation.
As EIM projects or initiatives are successful, they can be expanded to encompass moreusers, technologies, and processes. The recommended approach is to start small butbase your efforts on an encompassing, enterprise vision of transformation. What follows
is a collection of 15 best practices to support this approach.

Fifteen Best Practices for Digital Transformation
Digital transformation is an ongoing process. Transformational leaders must be
flexible and organizations agile enough to accept this truism. Beyond structuraladjustments, a change of attitude is already underway. Many organizations are
adopting entrepreneurial, innovative approaches to communicating and collaborating
to digitalize operations.
To build a foundation for transformational change, FIs must establish a provenmethodology and tested methods. Here are 15 best practices for the effective executionof a best-in-class methodology for digital transformation.
1.1 Identify opportunities for transformation. Focus on core needs that you areproviding and define how they can be transformed. Assess your current legacy
systems and investments in information and process management/automation
solutions.
2.2 Define an appropriate strategy based on goals and objectives. Clearly articulate
your vision and strategy to ensure that your firm is committed to and aligned
behind a common set of objectives. To truly transform, firms need to know whatgoals drive their organization. This means taking a stakeholder view early on to
identify what’s important company-wide. To know if you’re on the right track,consider the following: Organizational mission. What’s the organization’s long-term vision? What does

it hope to achieve?
 Objectives and goals. As with the mission, objectives also flow from the topof the organization down to the department level, and can take the form offinancial goals (e.g., profits) or departmental goals (e.g., to achieve a certain
level of the market share). Objectives also help to shape the lower-level
metrics and Key Performance Indicators (KPIs) that will become part of theirmeasurable strategy.
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STRATEGIES FOR CHANGE MANAGEMENT Current activities. Current activities and programs should be reviewed in orderto make decisions on how these activities will be measured.
3.3 Evaluate your business case. Determine costs. Outline benefits and risks to thebusiness. Engage early in discussions on governance, security, risk, and liability.
Consider current information-based processes and procedures. Measures should
be chosen based on the processes already in place. Eventually it will become
evident as to which top-level, operational, or strategic goals these measurement
areas impact. Prioritize initiatives and assign KPIs that can be measured.
4.4 Have a strong champion and dedicated team. During the initial stages ofan implementation, most organizations have a champion included in theplanning process, as well as the one or two individuals who act as the system’s
administrators. The champion provides knowledge of the organization’s
strategy management history and specifies the overall goals and vision of thetransformation program moving forward. The system administrators typicallytake on the remaining responsibilities: coordinating various meetings with thedepartments, building the actual database into the system, and organizing training.
This central team is in charge of managing all business processes that support the
program as a whole.
5.5 Recognize that transformation is not solely a technological issue. Culture andorganizational challenges will also need to be addressed.
6.6 Start small, but plan for a journey. A long-term transformational journey will bebased on or impacted by financial markets, strategies and business objectives,
capabilities, and budget.
7.7 Pilot and assess your progress. Many organizations want to hit the groundrunning, taking on as much as they can at once in the hope that it will get themto the finish line faster. Trying to measure everything at the same time is often
a setup for failure. For a successful implementation, plan for a realistic pilot—
something manageable that will allow you to make sure everything is being
done correctly from the start. By choosing a specific starting point—a function,
department, or unit within a department—you will be better equipped to fine-tune
your progress and well positioned for success.
8.8 Demonstrate incremental progress. This consists of both strategic value-drivermeasures (that are often delivered monthly, daily, or weekly) and leading indicators(usually found at the departmental or divisional level). After mapping out what’s
already being measured, to create an overall structure of metrics, consider
what’s been overlooked in the past to see if anything else can help to accomplish
defined goals. Those goals can be made up of multiple measures and KPIs, and it’s
important to understand the activities that directly contribute to each, in order todiscover, analyze, and improve—closing the loop on transformational success.
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9.9 Identify and communicate links between scorecards and dashboards tostreamline reporting and analysis. Identifying and then communicating linkages
helps everyone understand how their contribution impacts their peers and theorganization as a whole. For example, review details regarding where resources(e.g., department funds) will be directed, but also have immediate access to details
regarding the results of those activities and how they impact higher-level goals andobjectives. In a real-world context, before spending begins on individual programs,
your firm might need to establish a general plan of action that summarizes linkages
in terms of what they want to do and what the expected outcomes are.
10.
10 Determine current state of skill competence, and if necessary, establish newcompetencies. Ensure that your department or project team has the rightskills and competencies to contribute to transformation. You may need to
update your current training programs to support a rapidly evolving workplace.
A comprehensive approach using communities, the intranet, toolkits, andcertification can be effective. You might choose to outsource non-core services
to onshore or offshore services providers, or to vendors in the Cloud. When skills
gaps are apparent, consider partnering with startups or even developers in yourecosystem.
11 Collaborate and talk to users. Where do current processes fall short? What11.
works and what does not? As the initiative progresses and your organization
begins to understand overarching needs and where information is coming from,it’s important that the team talk to the end users who will be on the front linesof business improvement efforts. Engage with internal customers to understandtheir needs and issues for insight into how you can support them to deliver on yourstrategy.
12 Create a digital sandbox or testing ground. This will foster the iterative approach
12.
that supports continuous innovation and experimentation across digital channels.
13.
13 Adopt an entrepreneurial attitude and think like a disruptor. Transform legacy
technologies into strengths or remove them altogether. Be willing to disrupt yourbusiness and adapt to a changing environment.
14.
14 Operationalize and measure your success. Create opportunities to refine.
15.
15 Create a culture of digital innovation and transformation. This starts with theend user. A key component to making this effort seamless is having the ability tocommunicate the context around the project in the form of action plans, related
decisions, and related knowledge. The right technology will provide users withthese capabilities, but will also shorten the timelines associated with traditional
troubleshooting. As well, it empowers users to make informed decisions withconfidence because everything needed is at their immediate disposal. Set up digital

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units or centers of excellence so that best practices (for process automation, forexample) can be shared, tested, and refined.

The Digital Call to Action“With the right [digital] strategy, banks in developed markets stand to double their annual
revenue growth rates (i.e., from 4 percent to 8-plus percent) and lower their costs to serve by
more than 20 percent.”10
In the current global financial services landscape, FIs that adopt new digital businessmodels will be well positioned for success in the digital world. In fact, they will help
to define the vision of next generation financial services. Given the transformational
benefits of deploying a comprehensive EIM solution, future business leaders will makeinformation management a top priority. As champions of a digital agenda, they will
demonstrate how technology can facilitate change and investments in EIM technology,
systems, and processes will transform the industry.
The journey to digital transformation requires a radical overhaul of culture,organizational structures, technology, and operating models. Since this is the new way
forward, visionary leaders will need to figure out how to get there. EIM provides a
strategic blueprint for transformational success. All of the digital innovators featured inthis book tell the story of successful digital transformation. This vision of transformation
is being defined today and improved upon for future generations. Structures andprocesses are evolving, and journeys down the path to making the vision a reality will
be many and variant. The good news is—as we have illustrated throughout this book—the technology is available, and many enterprises have already taken their first steps
toward implementing a digital strategy with EIM at its foundation.
PSCU has established a Center of Excellence and is recalibrating its culture arounddigital innovation, as outlined in the following interview that describes their agile
approach to rolling out process automation and digital solutions.

10“ Banking 2016: Accelerated Growth and Optimizing Costs in Distribution and Marketing,” Accenture, 2012.

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TRANSFORMATION IN ACTION

PSCU
PSCU is one of the largest Credit Union Service Organizations (CUSO)
in the U.S., providing traditional and online financial services to nearly
800 credit unions and their customers. Their e-commerce solutions also
include electronic home and mobile banking. They provide credit, debit,
ATM, and prepaid card services to more than 14 million cardholders
and bill payment solutions to over one million online subscribers. All
PSCU services are backed by 24/7/365 support delivered through four
regional Total Member Care contact centers.

FIGURE 8.8: PSCU

What follows is an excerpt from an interview between Dan Rosen, Senior Vice President, Center ofProcess Excellence at PSCU and Tom Jenkins, Executive Chairman of OpenText.
TOM JENKINS: Let’s begin by discussing
what PSCU does, because it’s somewhat
unique. It’s my understanding that you
are a third-party provider of the services
offered by the credit union. Is that correct?
DAN ROSEN: Yes, when you see a Credit Union(CU) store front, we are the ones behind-the-scenes actually delivering their financial
services. And we do that for around 800
CUs across the country. PSCU is actually a
co-operative owned and directed by our CU
members. Many of our members are small andindependent, so together we have the scalerequired to deliver leading services.

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TRANSFORMATION IN ACTION

And how does the Center of Process
Excellence play into that? Tell me about
your team and what they do.

professional services.

Our team consists of process improvement
and Business Process Management (BPM)
technology expertise and we are tasked withensuring the back-office operates in optimal
ways and enables our CU members to deliver
excellent services to their customers. As you
know, our CU members operate in a highly
competitive industry. We support them byrolling out new and updated solutions, delivering
efficient and compliant back-end processes, andproviding them with consistent, superior service.

So PSCU sources new capabilities basedon your scale, bundles them, and rolls
them out to CUs with the necessary
customization and support.

Yes, we typically bundle pre-packed solutions
together, such as mobile solutions or online
web solutions. These are rolled out throughour customer service portal. One of our largest
bundles this year involved Apple Pay. Apple
ranks the banks they release to, and because webrought 400 CUs to the table for Apple Pay, wewere included in early phases of the rollout.

So, you’re essentially running the backoffice of a bank. Unlike a bank, however,which can enforce absolute uniformity in
how the customer is engaged, your front
end is much more complex.

I’m sure contactless pay capabilities likeApple Pay are having a big impact on youroperations. Give me a sense for how yourindustry has changed over the last 10
years.

Exactly. Our front end consists of hundreds ofindividual organizations, with each engaging
customers and delivering our services in aslightly different way. So customization is an
important aspect of what we do. A mobilebanking app, for example, would support PSCU
technology yet be customized for the CU’s
needs. So our operations are more complicatedthan a bank, in that sense.

It’s been a drastic change. Historically, CUs
in the U.S. operated about three to five years
behind large banking institutions, like Wells
Fargo and Bank of America. Over the last
three years, however, there’s been a lot of CU
consolidation and we’ve seen this gap closing.
We’ve seen larger CUs buying up smaller CUs
to increase their portfolio and asset size. And as
they’ve grown, their expectations have changed.
Where in the past CUs wouldn’t really think
about mobile apps, today they want the latest
capabilities, and they are pushing hard to rollthem out faster than ever.

How does your architecture support thatlevel of customization? You would need
an approach that separates the front-end
interface from your back-end architecture.

Absolutely. You can’t cheat on that. They
need to be separate. You also need toolsthat enable customers to do some of thefront-end customization themselves. Almost
every application we develop, for example,
has an administrative tool the CU can use tocustomize—add their own logo, modify theirbranding elements, etc. Most of the larger CUs
are very successful at using these tools. But,
depending on the extent of the customization
required and the abilities of the CU staff, wemay be required to provide additional

We talked earlier about architecture,and I’m wondering how you deliver yourservices in the Cloud. Where are you onthat journey? What’s your point of view
because I realize you have important
requirements for cybersecurity? I expect
you would leverage a multi-tenant
structure using hybrid model.

It’s very tricky. We have evaluated our processes
and data to make this determination. Initially,
we thought it was black and white, all or
nothing. But that’s not really the right approach.
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TRANSFORMATION IN ACTION

Today we have some on-premises server
solutions—regulatory solutions, in particular—
and we have cloud-based others that involve
document archives, or repositories. The benefitsof the Cloud are huge, but we need to balancethat with the overarching need to securesensitive data. That’s where the intelligent
BPM platform helps us because we can point
the web service layer to the back-end cloud
or on-premises server, and it won’t impact theend user. It’s very flexible. And the experience isseamless to the end-user.
With mobile solutions now playing an
integral role in your operations, what haveyou found are the biggest challenges?

Mobile introduces significant security
challenges, and this is a big concern for us.
We don’t want to follow in the footsteps ofbanks that have had millions of customer
accounts compromised. So we’re being very
diligent to comply with the PCI DSS (Payment
Card Industry Data Security Standard) for all
applications.
So you provide member CUs not justwith technologies that are compliant, butalso with best practices on how to meet
regulatory requirements? Is that correct?

Great question. We have a risk management
department within PSCU that stays up-todate with ever-changing laws and regulations,interprets how they impact the CUs, and helps
us navigate areas of legal compliance and IT
infrastructure compliance. So yes, we provide
CUs with technologies for compliance as wellas guidance on how to mitigate and protect
themselves.
In what way do you depend on automation
to help with compliance? Clearly,
automation would make the processrepeatable and ensure certain actions aretaken consistently.

Yes, this is definitely true. Around four or five
years ago we purchased a BPM solution andnamed our implementation TIMS, which stands
for Total Inquiry Management System because it
automates the process for CUs to make inquiries
with PSCU. It provides workflow automationand escalation, is completely scalable and, toour original point, the workflow automation
ensures our interactions are compliant.
As processes are digitalized there are ahost of benefits. Efficiencies, cost savings,
better customer services levels. Tell us
about the biggest impact areas for you.

Prior to TIMS, our process for handling service
requests was manual and paper-intensive.
CU inquiries were routed on paper and were
hard to track, and obtaining status reports was
impossible. This lack of visibility negatively
impacted our overall service delivery. Bybringing in the BPM platform and automating
our workflow, every request is now accessible
electronically and we can respond efficiently.
The platform also provides advanced
reporting and analytics for business insight.
Our customers and our employees are very
happy with the new levels of service we candeliver. Over and above increased customer
satisfaction, we have doubled our service
request volume with no additional headcountand saved over $300, 000 through process
efficiencies and increased workload capacity.
Your results are excellent. How was youroverall deployment experience?

We have learned a lot through trial and error.
Initially, we deployed the system with brute
force, without understanding stakeholder
requirements or the change management aspectrequired. We are a 30-year-old company,
and staff was comfortable with our manual
processes. Cultural resistance was an area weneeded to address. At the 12-month mark, theproject was transferred from IT to the processside where I became involved. We decided tore-deploy and started with a lot of focus groups,
a lot of Voice of the Customer (VoC) roadshows.
We heard what the customers were looking
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TRANSFORMATION IN ACTION

to start small. Pick the biggest pain point to thecustomer, pick the processes that will have thegreatest impact on it, roll out the fix to a small
group, iterate, and then build on your successwith a bigger deployment. A BPM platform
supports this type of agile process creation andmanagement.

for, and we heard what internal resources werelooking for. This was critical to our success.
At around the three-year mark, we surveyedcustomers who hated the system initially andabout 75 percent said that it actually improved
their experience with PSCU.
Is it fair to say then, the lesson for people
thinking of Business Process Management
is not to treat it as a technology or a
product, but as the scaffolding for a
project?

Thank you Dan, for this insightful
conversation.

Absolutely. My advice to anyone deploying BPM
is to address four key areas: technology, process,people, and standards and governance. People
have the tendency to “shortcut” deployment
efforts to technology and process. But if
you’re not addressing people, governance andstandards, it's going to fail.
Now let’s talk about that. After you deploy
a process, things change. We get regulatory
oversight changes. We get changes inbehavior patterns. Mobile, for example,
changes the way people use products andservices. There is also a constant flow ofregulation which means processes need
to be tweaked. How do you re-shape yourprocesses and then roll them out?

We’ve adopted an agile process for BPM. The
platform is flexible and easy to change. So weare constantly tweaking processes and every
week we release updates. So, to your point, withthis ongoing, iterative deployment approach, we
can pre-emptively meet regulatory compliancerequirements.
I think that’s clever, using a continuous
stream of small changes. I expect that helps
with change management as well. Does it?

Absolutely. Frequent, small changes are mucheasier for users to digest. And our agile approachalso lets us test changes with a small group ofusers before rolling them out to a larger group.
Most of the variations and issues surface fromthis small deployment. So my advice to others is
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211

INDEXDIGITAL FINANCIAL SERVICES

Index
A
Account Opening 85, 106, 141, 159, 173
Age of the Customer 37
Algorithm 2, 16, 50, 62
Allstate Insurance 81
Amazon 37, 76
Analytics 2, 6, 12, 18, 56, 59, 61-63, 65-67, 86-88,
99, 139, 154-155, 178, 181, 188, 196
Analytics Suite 155
Android 11, 15, 81

Beacons 11, 18
Benefits Administration 107
Big Data 20, 51, 54, 59, 122, 129, 155, 163, 188
Biometric Identification 11, 81
Biometrics 11
Bitcoin 4, 5, 77
Black Sea Trade & Development Bank 33
Boubyan Bank 140-141
Branch 12, 14, 17, 30, 74, 78-79, 89, 104-106, 108,
136, 141, 187

Anti-Money Laundering 35, 128

Bring-Your-Own-Device (BYOD) 15, 33, 129, 136,
185

Aon Affinity Insurance Services 56-57

Broker 9, 57, 65, 99, 112, 126, 169, 185

App Store 186

Budget 5, 63, 76, 102, 129, 139, 143, 165, 182, 188,
191

Apple 11, 77, 79, 81, 195
Apple Pay 11, 77, 79, 195
Application Programming Interfaces (API) 31, 122

Business Intelligence (BI) 8, 21, 62, 64, 70, 87, 115,
122, 159

Application Service Provider (ASP) 16

Business Model 47, 101

AppWorks 155

Business Network Cloud 155

Archive 14, 44, 104, 126, 130, 147, 156, 189, 196

Business Networks 8, 39, 98, 100, 122, 174

Archiving 15, 36, 104, 130, 140-142, 147, 155, 162

Business Process Management (BPM) 67, 69, 107,
109, 122, 147, 155, 159, 161, 181, 195, 197

Artificial Intelligence (AI) 23-24, 62
ASR Nederland 130-131

Business-to-Business Integration (B2B Integration)
39, 110-112, 114, 118, 122, 164, 166-168

Asset Management 22, 106, 142

Business-to Business Network (B2B Network) 122

ATM 18, 77, 79, 81, 90, 135, 194
Automated Clearing House 14
Automation 18, 23, 38, 44, 71, 106, 110, 140, 159,
170-172, 190, 193

BC
Canadian Tire 6
Capital 5, 28, 33, 52, 65, 76, 98, 115, 128, 139, 159,
186

Banca Popolare di Sondrio (SUISSE) SA 103-104

Case Management 38, 69, 106, 108, 142, 155, 159161, 172, 181-183

Bank Branch 76

Cash Management 111, 113, 116, 120, 167

Bank Identifier Codes (BIC) 112

Change Management 16, 174-176, 179, 196

Basel Guidelines 127

Citibank 77-79

Basel II 128, 148, 156

Claims Management 8, 42-44, 131Basel III 128

Claims Processing 44, 63, 109, 131, 159, 170

Beacon Technology 11

Classification 15, 130, 147, 156

214

INDEX

Client Management 159, 172

Customer Relationship Management (CRM) 14, 59,
71, 95

Client Onboarding 38, 69, 106, 118, 170, 182

Cyberattack 56, 115, 165

Client Reporting 106

Cybercrime 56, 65, 134, 136, 140

Cloud 7-10, 16-18, 39, 46, 66, 74, 113-118, 129,
142, 149, 160, 163-166, 174, 188, 192, 195

Cybersecurity 15, 56, 58, 135, 150, 195

Clayton Christensen 2

Cloud Computing 7, 8, 18, 55, 118, 129, 150, 154,
178, 185, 189
COBIT 128
Collaboration 8, 14, 31, 41, 45, 66, 84, 96, 98, 103,
122, 131, 155, 157, 172, 180, 185, 188

D
Dashboard 5, 22, 33, 62, 70, 88, 105, 108, 117, 141,
161, 164, 173, 192
Data Integration 66, 118, 188

Commercial Cards 169

Data Mining 21

Communities 29, 41, 68, 77, 85, 118, 173, 188, 192

Data Protection Act 128

Compliance 13-17, 20-22, 44, 54, 65, 95, 101, 113118, 125-130, 137, 144, 147-150, 160, 162, 166,
173, 182, 189, 196

Data Visualization 21

Connectivity 2, 6-8, 18, 29, 46, 102, 110-115, 118,
126, 138, 140, 142, 145, 149, 166-169

Demographics 59, 85, 186

Consumer Protection Act 127
Content Analytics 62, 155, 163

Digital Business 24, 27-29, 31, 34, 38-40, 45, 98,
100, 154, 156, 177, 193

Content Lifecycle Management 147, 156

Digital Business Network 38

Content Management 9, 14, 95, 103, 141, 155, 158,
187

Digital Consumer 30, 35, 37, 74

Content Suite 155, 157
Contextualization 92

Digital Disruption 1, 2, 5, 7, 28-30, 34, 47, 96, 98,
178, 186

Corporate Treasurers 99

Digital Ecosystem 3, 12, 29, 37

Corporate Treasury Departments 113

Digital Engagement 38, 39, 41, 72-74, 95, 176, 181

Counterparties 39, 98, 103, 110, 113, 117, 142,
149, 166, 188

Digital Enterprise 35, 40, 45, 122, 149, 153, 157,
166, 174, 180, 185, 189

Credit Card 6, 66, 71, 93, 111, 164, 168

Digital Governance 38, 41, 45, 66, 125, 129, 132,
149

Cross-sell 59, 74, 93, 170
Crowdfund 5
Crowdsource 84, 179
Culture 10, 32, 41, 55, 141, 176, 181, 188, 191-193
Customer Acquisition 17, 63, 68, 74, 84, 89, 96,
150, 160
Customer Communications Management 94, 162
Customer Experience 17, 18, 30, 38, 40, 58, 64,
68-70, 79-83, 86, 89, 92-96, 105, 123, 155, 172,
182, 188

Defensible Deletion 138
Digital Assets 29

Digital Customer 39, 78, 92, 98, 160

Digital Marketing 74, 84, 87, 89
Digital Media 176
Digital Natives 32, 41, 76
Digital Shadow 54, 56
Digital Strategy 41, 47, 59, 154, 177, 180, 186, 188,
193
Digital Supply Chain 39, 42, 46, 98-100, 123
Digital Technologies 6, 30, 37, 41, 44, 68, 74, 78, 80,
89, 103, 106, 119, 129, 134, 154, 178-180, 188

Customer Experience Management (CEM) 17, 67,
75, 95, 155, 160, 162, 188

Digital Transformation 12-14, 24, 30-32, 41, 45, 50,
98, 110, 146, 154, 174, 176, 185, 190, 193

Customer Journey 24, 46, 82, 87, 90-92, 96, 180

Digital Wallets 10, 24

215

DIGITAL FINANCIAL SERVICES

Discovery Solutions 157
Disintermediation 63

Financial Transactions 10, 79, 89, 111, 115, 146,
167

Disposition 147, 150, 155

Fintech 3, 4, 6, 98, 103, 117, 126

Disruptive Innovation 2-4, 42

First United Bank and Trust 172-173

DNB Finans 87-88

Fluor 142-146

Dodd-Frank Act 127, 138

Forecast 21, 76, 77, 163, 178

Dwolla 5

Fraud 21, 61, 63, 65, 81, 88, 128, 129, 147

Dynamic Case Management (DCM) 39, 106, 123,
183, 185

FWD 93-94

G
E

General Electric 6

e-Commerce 46, 52, 112, 160, 166, 178, 194

Generation Z 30-32, 41, 59, 149

e-Discovery 36, 41, 54, 130, 132, 140, 156

Globalization 30, 34, 39, 99, 100, 102, 123, 148,
165

Electronic Data Interchange (EDI) 14, 111, 113,
115, 117, 122, 166-168

GoCardless 5

Encryption 147

Google 11, 18, 37, 50

Enterprise Content Management (ECM) 67, 155,
156, 158

Governance 32, 38, 41, 45, 66, 72, 95, 108, 125130, 132, 140, 142, 147-150, 155, 160, 174, 181,
186, 189-191, 197

Enterprise Ecosystem 29, 47, 66
Enterprise Information Management (EIM) 32, 41,
45, 54, 69, 72, 96, 122, 127, 147, 170, 188, 193
Enterprise Resource Planning (ERP) 14, 53, 67, 72,
114, 122, 140, 159, 167, 180

Governance, Risk, and Compliance (GRC) 126, 129,
137, 140, 142, 147, 149
GPS 19, 51, 81, 91
Gramm-Leach-Bliley Act (GLBA) 111

Equity 33, 35, 37, 150, 158, 169
Experience Suite 155, 160
Extensible Business Reporting Language (XBRL)
111

HHawksford Group 170-171
Health Insurance 59, 111, 131, 184

F

Health Insurance Portability and Accountability
Act (HIPAA) 59

Facebook 17, 53, 56, 76, 83, 88

HelloWallet 5

Fair and Accurate Credit Transactions Act (FACTA)
127, 128

Home Depot 4, 6

Fax 43-44, 111, 113-116, 122, 142, 164

Human Resources 53, 57, 70, 181, 182

Human Capital Management 144, 159, 186

Fidelity 18, 56
Fifth-Generation (5G) 7, 8
Financial Crime 35

I

Financial Services Authority 128

Identity Theft 20, 147

Financial Supply Chain 45, 97-101, 110, 112, 114,
117, 123, 164, 169, 181

Incumbents 2, 4, 6
Information Exchange 8, 39, 66, 79, 94, 96, 111113, 115, 122, 139, 155, 164, 188216

INDEX

Information Flows 45, 54, 67-69, 95, 122, 129, 142,
148, 155
Information Governance 41, 45, 75, 95, 126, 132134, 137, 142, 147, 149, 156, 160, 162, 174
Information Governance Reference Model (IGRM)
130
Information Risk Management 63, 129, 137, 139,
140, 147, 150
Infrastructure 2, 4, 6, 17, 45, 54, 64, 103, 136, 148,
166, 172, 176-179, 185, 188, 196

Liquidity 35, 98, 112, 114, 128
Litigation 54, 129, 132, 137, 154, 156
Loan 14, 18, 21, 37, 63, 76, 82, 85, 93, 106, 108,
141, 159, 173
Loan Origination 85, 106, 108, 109
Loblaw Companies 6
Logistics 102, 145, 167
Loyalty Programs 29, 77, 82, 84

Insider Trading 63
Insurance 2, 3, 5, 17-20, 39, 52, 56-59, 69, 76-78,
94, 109, 131, 147, 159, 169, 184, 186
Insurance Group Benefits 169
International Bank Account Numbers (IBAN) 112
Internet 2, 6-10, 17, 19, 32, 35, 51, 79, 81, 86, 90,
114, 122, 154
Internet of Things (IoT) 2, 6, 17-20, 24, 35, 81, 122,
154

M
Machine-to-Machine 179
Managed File Transfer (MFT) 120, 165
Managed Services 118, 120, 155, 164, 166-169
Manual Processes 46, 105, 139, 170, 173, 182-184
MarketRiders 5

Interoperability 18, 188

Markets In Financial Instruments Directive, (MIFID) 22, 128

Intranet 149, 192

Mercer 106-107

Invoice Management 144

Metadata 14, 43, 44, 104, 156

iOS 15

Metrópolis Seguros 186-187
Migrate 102, 104

J
Japan Credit Bureau (JCB) 167-168

Millennials 15, 23, 37, 47, 59-60, 76, 83, 119-121,
145, 160, 177
Mint.com 5
Mobile App 5, 32, 77, 160
Mobile Device 11, 76, 79-81, 90, 129, 146, 149K

Mobile Financial Services 10, 18, 81

Key Performance Indicator (KPI) 141, 190

Mobile Payments 10, 14, 52, 79, 117, 128

KeyBank 118-120

Mobile Shoppers 77

Kickstarter 5
Know Your Customer (KYC) 61, 81, 108, 137,
147

Mobile Transactions 10, 39, 52
Mobility 10-12, 14, 18, 81, 120, 145
Modernization 6, 101-103, 118
Money Dashboard 5

L
Legacy 2, 17, 21, 32, 98, 102, 116, 136, 159, 167,
185, 190, 192

Money Laundering 35, 63, 65, 128, 142, 147
Money Managers 5
Mortgage 18, 37, 38, 63, 82, 105, 108, 173
Moven 12

Lending 2, 5, 33, 85, 108, 117, 147
Lending Club 5

217

DIGITAL FINANCIAL SERVICESN

Privacy Legislation 131

NASCO 63-64

Process Automation 18, 23, 24, 71, 108, 155, 171,
182, 193

National Institute of Standards and Technology(NIST) 128, 129, 137

Process Suite 155, 159

Near Field Communications (NFC) 11, 79
New Account Opening 85, 173
New Business and Underwriting 109, 159, 172
New Client Acquisition 161, 170
Non-Compliance 17, 21, 35, 105, 126, 132-134,
138

Procurement 63, 142, 143
Progressive 19, 81, 138, 189
Progressive Insurers 81
PSCU 193-197

R
Rates 2, 4, 51, 69, 84, 108, 113, 159, 169, 193

O
Omni-Channel 40, 68, 75, 87, 89, 90
Ontario Municipal Employees Retirement System(OMERS) 157-158
OnTrees 5

Records Management 33, 36, 43, 130, 140, 142,
145, 156
Regulations 2, 5, 6, 9, 12, 15-17, 22, 30, 41, 50,
58, 68, 98, 101, 111, 127-134, 139-142, 150,
173, 187, 196

Open Source 5, 103

Regulatory Compliance 13, 16, 54, 65, 117, 127,
133, 147, 162, 197

Operational Agility 30, 38

Regulatory Reporting 21

Optical Character Recognition (OCR) 184

Repository 5, 43, 53, 86, 139, 141, 144, 149,
185, 196

P
Pacific Blue Cross 160-161

Responsive Design 75, 87, 90
Retention 44, 65, 69, 85, 94, 96, 127, 145, 147,
159, 162

Payment Card Industry; Data Security Standard(PCI-DSS) 111, 128, 169

Retirement 63, 107, 158

Payment System 5

Robotics 23

Robo Advisors 24

PayPal 4, 5, 76
PC Financial 6
Peer-to-Peer (P2P) 4, 31, 77

S

Permissions 44, 142, 147, 149

Sarbanes-Oxley 127

PIPEDA 128

Scalability 55, 64, 70

Platform-as-a-Service (PaaS) 122

Search 36, 58, 95, 104, 127, 140, 155, 187

Point-of-Sale 11

Secure Socket Layer (SSL) 59

Portal 39, 58, 70, 87, 106, 113, 160, 164, 181, 195

Securities 20, 101, 111-113, 118, 164, 169

Portfolio 22-24, 35, 50, 58, 67, 82, 83, 93, 116, 158,
185, 195

Security 9, 15, 24, 35, 38, 41, 59, 66, 75, 87, 101,
113-116, 132-136, 145, 147, 166, 174, 185, 196

Portfolio Management 22, 83

Security Breach 135, 136

Predictive Analysis 19, 62

Segmentation 61

Privacy 17, 20, 24, 54-56, 58, 75, 111, 131, 133,
138, 150, 174, 185

Sensors 17, 19, 23, 51, 81, 122
Sentiment Analysis 62, 86
218

INDEX

SigFig 5

TIW Group 9

Silicon Valley 3, 4, 23

Token 59, 79

Silos 7, 21, 53, 54, 62, 105, 134, 139, 142, 157, 181

Tokenization 79

Simple Service Discovery Protocol (SSDP) 59

Total Administrative Services Corporation (TASC)
69-70

Single European Payments Area (SEPA) 112
Smart Process Applications (SPAs) 39, 106, 159,
183, 185

Trade Finance 169

Smartphone 10, 11, 19, 37, 52, 68, 77, 79, 90, 129,
146

Transaction Processing 38, 118

Social Insurance 5

Trading Grid 120, 164, 166
Transparency 8, 12, 21, 36, 45, 62, 98, 107, 118,
139, 157, 164, 170

Social Media 2, 17, 24, 32, 40, 52, 62, 66, 83-86, 90,
129, 142, 149, 154, 185, 189

Travelers 19

Social Network 17

Twitter 17, 84

Treasury Management 119-121

Software-as-a-Service (SaaS) 8, 118, 150, 185
Standardize 18, 21, 127, 164
Starbucks 4U

Startups 2, 4-6, 103, 117, 179, 192

Underwriter 9, 108

Stock 18, 21, 24, 65, 158

Unstructured Data 9, 15, 35, 44, 53, 59, 62, 70, 96,
142, 189

Storage 7, 21, 54, 105, 109, 130, 131, 138, 147, 161,
171, 185
Straight-Through Processing 167, 169

Upsell 59, 74, 84, 93, 162, 170
U.S. Treasury 5, 127

Structured Data 44, 61, 67, 72
Subscription-Based Economy 8Supply Chain 35, 42, 53, 96-102, 112, 117, 122,
164, 166, 169, 181
SWIFT 7, 14, 39, 112-115, 117, 167
Symcor 115-116

V
Value Chain 18, 28, 41, 47, 62, 98, 122
Volkswagen Finance China 35-36

Sympany 183-184
Systems of Engagement 66, 178, 180, 189
Systems of Record 66, 180, 183, 189

W
Wallet.AI 24
Walmart 6, 51

T

Wealth 13, 19, 30, 50, 63, 66, 76, 82, 86, 92, 106,164

Tablet 10, 15, 40, 68, 77, 95, 129, 145, 149

Wearable Devices 18

Targeted Marketing 68, 170

Wearable Technologies 6

Telematics 19, 81

Web Content Management (WCM) 95

Temenos 21-22

Web Experience Management (WEM) 68

The PrivateBank 12, 13-16

Wi-Fi 11, 145

Time-to-Compliance 36, 142, 148-149

Wiki 32

Time-to-Customer Service 69

Workflow 14, 16, 21, 70, 71, 113, 141, 159, 161,
196

Time-to-Market 68-70, 103, 115, 117, 132, 169

219

DIGITAL FINANCIAL SERVICES

Y
YouTube 51, 84, 91

Z
Zero-Distance Connectivity 8
Zopa 5220

Mark J. Barrenechea joined OpenText™ (NASDAQ: OTEX, TSX: OTC) as President andChief Executive Officer (CEO) in January 2012. He currently serves as CEO and Chief
Technology Officer (CTO) and is a member of the board. Under Mr. Barrenechea’s
direction, the company has grown both organically and through strategic acquisitions
into a $1.9B company. Through its commitment to innovation and customer-centricity,
OpenText has successfully realigned its products to transform itself into a leader inthe Enterprise Information Management (EIM) market.
Before joining OpenText, Mr. Barrenechea was President and CEO of Silicon
Graphics International Corporation (SGI), where he also served as a member ofthe board. During his time at SGI, he led the company’s strategy and execution.
Prior to SGI, Mr. Barrenechea served as Executive Vice President and CTO for CA,
Inc. (CA), (formerly Computer Associates International, Inc.) and as a member ofthe executive management team. Mr. Barrenechea was also Senior Vice Presidentof Applications Development at Oracle Corporation, responsible for managing a
multi-thousand member global team. He has also held a number of other positions,
including Vice President of Development at Scopus, a software applications company,
and Vice President of Development at Tesseract, where he was responsible forreshaping the company’s line of human capital management software. He holds
a Bachelor of Science degree in Computer Science from Saint Michael’s College.
Mr. Barrenechea currently serves as a member of the Board and Audit Committeeof Dick’s Sporting Goods.

Mark J. Barrenechea

Mr. Barrenechea has authored several books about the evolution of the enterprisesoftware industry, including ON DIGITAL, Digital: Disrupt or Die, e-Government or
Out of Government, and Enterprise Information Management: The Next Generation ofEnterprise Software.

P. Thomas (Tom) Jenkins is Chairman of OpenText (NASDAQ: OTEX, TSX: OTC) andhas served as a member of its board since 1994. Mr. Jenkins also served as President
and Chief Executive Officer of OpenText from 1994 to 2005, and as Executive
Chairman and Chief Strategy Officer from 2005 to 2013. Prior to that, he servedin several managerial and technical capacities at various technology companies.
Mr. Jenkins has been active for more than 30 years in innovation and economic
development in both the private and public sectors in Canada. He is also a member ofthe Board of Thomson Reuters Inc. and of TransAlta Corporation. He is an Executive
Fellow at the School of Public Policy at the University of Calgary, a Director of the C.D.
Howe Institute, an appointed member of the National Research Council of Canada,
and Director of the Canadian Council of Chief Executives. Prior to his work in theprivate sector, Mr. Jenkins served as a commissioned officer in the Canadian Forces
Reserve and currently serves as Honorary Colonel of the Royal Highland Fusiliersof Canada (RHFC), a reserve infantry regiment in the Waterloo Region. Mr. Jenkins
is a member of the board of the Canadian Forces Staff College Trust in Toronto.
Mr. Jenkins holds an M.B.A. from the Schulich School of Business at York University,
an M.A.Sc. in Electrical Engineering from the University of Toronto, and a B.Eng.
& Mgt. in Engineering Physics and Commerce from McMaster University. Mr.
Jenkins also received an Honorary Doctorate of Laws (LLD) from the University ofWaterloo and an honorary Doctorate of Philosophy (PhD) in Military Science fromthe Canadian Forces College (Royal Military College). Mr. Jenkins was appointed
an Officer of the Order of Canada (OC) in 2011 for his contributions to educationand innovation in Canada, the Canadian Forces Decoration (CD) in 2013, and theQueen’s Diamond Jubilee Medal (QDJM).

Tom Jenkins

Disrupt or Die
Discover digital transformation to compete in the digital world.
Digital disruption is toppling market leaders and restructuring industries faster than everbefore. Over the next five years, executives expect digital disruption to displace four out of ten
incumbents—or 40 percent of established market leaders. This is a profound forecast, and it applies
to all industries, including financial services.
Financial technology or “Fintech” startups are using algorithm-based innovation to help people
save money, balance their budgets, plan financially for the future, invest wisely, and process
payments digitally, in real time. In the process, they’re reshaping the entire industry.
How can the incumbents keep pace? Whether you’re a pure-play startup or an establishedfinancial brand, the only way to survive disruption will be to digitally transform your businessprocesses and information, operate at the speed of digital, and deliver products and services using
digital channels.
In short, your organization will need to disrupt or die.
Information lies at the core of digital transformation. In a digital world, information is the new
currency, playing a fundamental role in empowering Financial Institutions through innovation,
growth, and opportunity. True digital leaders will differentiate their products and services based ona strategy that maximizes the potential of information. Enterprise Information Management (EIM)
empowers your organization to make this journey. This book has been written to guide you througheach phase of transformation, providing you with effective ways to accelerate your business in thedigital world.

“Over the next five years, digital
disruption will displace 40
percent of established market
leaders. Will you be one?”© 2016 by Open Text Corporation. All rights reserved. Printed in CanadaISBN 978-0-9936047-4-4

9 780993 604744