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Banks and corporates live in the twentieth century

I was surprised or not to have a long discussion with some bankers and corporates about personalisation last night.

My contention was that a bank should know that they have an influential corporate treasurer decision maker as a business client, and be able to use that knowledge to deliver better service to that individual as a personal client.

Not just that individual, but their family and extended connections.

The bank was shocked by this idea, claiming that it was some form of bribery.

Complete baloney of course, as I was just advocating better client data mining and data usage.

After all, most banks find it difficult enough to make the connection between me and my partner, let alone me and my company, and we are a small company.

You would think:

(a) that the firm could make the connections between me and my CFO, COO, etc;

(b) they would see how our wider network affects our financial habits; and

(c) personalise far more of our retail offers to reflect our corporate activities.

What I am really getting at is the use of big data again.

It stuns me that in today’s world, if I were the corporate treasurer for MegaGlobal Corp (MGC) and my major bank relationship was with ABC Bank, that ABC Bank has no idea when Chris walks into their retail branch that I am a client of that bank.

The retail experiential impacts of every day touch for me and my family could colour my whole view of ABC Bank in my dealings with them as treasurer of MGC.

Surely, in today’s world of big data leverage and analytics, this is a mere hygiene factor.

And yet, the bank turns to me and claims it’s potentially unlawful to be influenced in dealings with the individual through their dealings as a corporate.

Interesting.

We then got into a further debate about what stops this, and most of it si down to silo’s.

The bank is segregated between commercial and retail banking and never the twain shall meet or share data.

That Chinese Wall is not a reflection of compliance but more business interests and objectives of the heads of business in the bank.

So be it … the silo debate is one that I’ve explored regularly on this blog.

But what surprised even more is that, as we talked about this silo view of the world within the bank, the corporates said that their silo view was the same, fi not worse.

Corporate treasurers have no single view of the world, but many and multiple views of the world based upon what each division and country is willing to share.

That’s why there is no payments factory as such, but lots of payments factories.

Each country, line of business and operation within the corporate may be running their own little system today for cash pooling and netting, liquidity forecasting, payables and receivables.

This seems archaic as I’ve been talking about single global payment platforms for ages too, but the corporates in the room say that their challenge has been persuading just a few divisions to consolidate towards payment factory platforms, let alone a global platform.

In fact, most corporates in the room last night were honest enough to admit that they have just embarked on the long road towards a payments factory.

Amazing.

Here’s me in the big data, social economy of 2012 and the largest banks and corporates  in the world are still just thinking about it.

What it says to me is that banks and corporates are losing billions due to commercial, capital and liquidity inefficiencies caused by their irresponsible and stupid internal political battles.

Ah well, nothing changes there then.

But here's the alternative view: if a bank or corporate overcomes the politics and starts thinking like an Amazon, Google, Apple or Facebook – in other words, really understand how to leverage data as an asset, regardless of the silo's – then they have the opportunity to blow their industry to pieces.

 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • Chris:
    I couldn’t agree more with your premise. I entered the financial services industry about a year and a half ago to work on solving this very problem. Since then almost every single contact I’ve made in this industry either doesn’t see the value in this type of data or is too stuck in silo thinking to do anything about it.
    Not that our organization is the only exception, but I do think we have a huge opportunity to make the client experience amazing because of how we view this type of data. At Acru, we’ve deployed Salesforce to curate valuable client-centric data to serve as a means to deliver wisdom in a relevant experience for each and every client of ours.
    In less than a year of being open to the public we’ve had some incredible stories, delivered value that could not have been found without a holistic viewpoint, and have measurable results that would blow away most of the silo thinkers you mention above.
    Thanks for sharing this meaningful message with the world. Feel free to learn more about our efforts at acruwealth.com

  • Andy Reid

    Good summary Chris. Astute. Well observed, “Constructively disruptive” and in this sense, analogous to the some of the ideas of Clay Christensen in his thoughts around business model evolution (read as a compliment !!)

  • This seems is constant battle we have been discussing since the early days of middleware, even if you do find enlightened individuals in banks who see the big picture they are usually not the decision makers and to make such a fundamental change involves getting the senior executives of the bank, not the retail, treasury or wholesale part of the bank, to make a decision. These guys either don’t see the value, don’t have the political will to make it happen or more often than not they don’t get the value explained to them due to political and empire plays by the execs in the silo’s. I think the senior exec’s should go see the big supermarkets and learn a thing or two about big data and its value.

  • Facebook Dad

    Chris, I dont want to live in the 20th Century, I would be happier living in the 22nd Century…(and you know that there is a but coming!) but while we still live in a world that has legal and fiscal barriers on financial transactions and far worse: a legacy of systems, processes and people (ok – not everyone), it is going to take an age to get there. The good news is that I can see how social media can and will speed this up – the bad news is that it will probably have to wait until my kids (who I keep track of on facebook) get into the work place.

  • What’s interesting about this viewpoint is the ability of banks to integrate all data into one central database. In this scenario, we see that small, up-and-coming banks focused on innovation have the advantage. Instead of replacing an array of existing systems, they can implement an enterprise system that they can “grow into” and it will become their core data system. Bigger banks have to focus on the politics and logistics of the corporation, like you said, so it takes considerable time and resources to change tactics for data management. It will be interesting how this pans out in the next few years.

  • What’s interesting about this viewpoint is the ability of banks to integrate all data into one central database. In this scenario, we see that small, up-and-coming banks focused on innovation have the advantage. Instead of replacing an array of existing systems, they can implement an enterprise system that they can “grow into” and it will become their core data system. Bigger banks have to focus on the politics and logistics of the corporation, like you said, so it takes considerable time and resources to change tactics for data management. It will be interesting how this pans out in the next few years.