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Bank designs versus architecture

I’ve been having an ongoing debate with some folks in the Finextra community for the last week over branch versus IP architectures, and it is clear that some people are confused so I will try to explain again.

The discussion I started last week was all about architecture, which is why I kept referring to foundations.  The discussion some people want to have is about bank designs, which is different.  The former is about what materials, dimensions, frictions, structures.  The latter is about interior design, windows, pillars and brick colours.

The two go hand-in-hand.  The bank designer would start with the customer and how to focus upon customers.  I call this buyology and blogged about it a while ago.  The designer would use these techniques of customer understanding to build processes from that customer viewpoint.  At the end of designing, they would then go to a specialist to build that design.  And the specialist is called an architect.

The base idea of this is at the core of Business Process Re-engineering (BPR) which is why we talk about process redesign, when we're designing, and process implementation, when we're architecting. 

The architect has been called in recently because the bank's foundations are  sufffering from subsidence.  The foundations were built on cement and bricks-and-mortar, and those foundations are cracked due to the revolution of technology in the last fifty years.  Most banks got away with painting over the cracks but, today, they are finally saying they want to replace the brick foundations with technological foundations in the form of IP architectures.

The architect is there to replace the physical foundations, process implementation, and the designer is there to work out what the new bank house should look like, process redesign. 

Likening this to the building trade illustrates the point well. 

A house or building has foundations.  My point is purely to say that the bank architects of the last few decades used branches as those foundations but today would use IP infrastructures.

This does not mean that branches or people are irrelevant.  The branch and face-to-face discussion is more to do with what type of house you want to build.  In other words, it's the design, the vision, the interior decoration, the furniture and the other bits. 

The designers may say: “I want to build a high net worth house, with sales advisory centres for people who want face-to-face engagements”.  In this case, you build your bank house with IP foundations and lots of snazzy advisory centres, or branches, in the physical world.  Others may say: “I want to build a low-cost high volume processing house, with minimal physical contact” in which case you build your bank house with IP foundations and hardly any branches in the physical world.

Either way, the IP is the foundation, and that is where the architect will start.  That was the point of last week’s blog.

In particular, these is some confusion about the fact that I am starting with a technology focus, rather than a customer focus.  As an architect of today's bank, an implementer, I would start with technology as technology, especially IP networking, is my raw material for the building.  As a process designer, I would start with customers and staff, as people are my core differentiation for populating my building. 

From an architecture and implementation viewpoint, I would look at the IP network and how to build upon that network.

From a design and process redesign viewpoint, I would start from the statement: "Design for the customer experience you want to deliver to the customers you want to engage, by creating processes and touchpoints that those customers want to engage through and with you."

In other words, work out what customers you seek and what those customers want.  Build your bank and design it based upon desired customer experiences.  Build those customer experiences to appeal to the customer behaviours of your targeted audience.  Address the needs of digital natives, digital immigrants and digital aliens, and work out how your designs address this mixture of customer types.  What experiences and behaviours will these different audiences require and how is it best to deliver them? 

These are all designer questions and nothing to do with architecture.  Once you have your design you can then give this to the architect to work out how to build it … and the architect will begin with a base design using IP as the foundation. 

So we have a critical segregation between the designer, who will focus upon processes, interactions, people and customers; and the architect, who will focus upon building materials, infrastructures, networks and technologies.

The fact that people get confused about this segregation, the channel mix, the house design etc, versus the foundations of the bank house, is because they are mixing up business process redesign and business process implementation.  The channel strategy is the house design; the building strategy is the architect’s IP materials. 

My focus is that the strategy for the architect is to lay IP foundations rather than brick foundations.  It’s to do with the materials at the base of the bank.  The fact that these materials for the foundations are fundamentally different today, because they are IP-based rather than brick-based, is the reason why bank's need to fundamentally redesign.

This redesign is to replace the building foundation.  In replacing the foundation, the strategy for the design of the house itself may also change, but this is still very much open to the designer's competitive strategy.  It is a totally separate discussion that is nothing to do with architecture. 

The architect is purely working out how to replace the foundations with IP.  Therefore, the designer's role is to tell the architect what the designer wants to build on top of the foundations – branches or multichannels or electronic connections.

The two roles – architect and designer – go together but are very separate and distinct roles.  The reason the redesign started in the first place however, is because the foundations are crumbling – the branch brick-and-mortar model – and needs replacing through a new architecture – IP networking.   And, as I keep saying, architecture is related to, but separated from, design.  

In conclusion, the issue today is that most banks have their foundations in branches as the raw material, and that is forcing them into poor designs that do not match the way they want to behave.  That is why they are hiring architects to replace those foundations with IP.  The architects are then asking the bankers: "what design would you like to have on top of these foundations then?"

Some bank designers want redesigned branches.  Some want to close down branches.  Some want to integrate branches onto common platforms with their electronic channel connections. Some just want electronic connections.

It's all a matter of choice but, as you have to replace the foundations, you might as well re-think, re-engineer and re-energise to exploit the new foundations effectively.

 

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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