Bridging the banking silos
by Brad Liebmann, Managing Director, Xbridge Ltd
Business Money, February 2005
A small business owner recently described to me how nervous he used to be about providing online his contact information to banks. He feared the banks would relentlessly hound him -- hawking a wide range of inappropriate financial products. He went on to explain that his concerns were unjustified. Because after they responded to his initial request, no bank ever contacted him again. Remarkably, many never even responded to his original request.
Most UK banks operate in silos. Customer information (including new sales leads) rarely moves efficiently between the silos. When intra-group referrals are made, systems to effectively qualify, monitor progress and provide feedback to the referrer are seldom employed. As a consequence, banks squander most cross selling opportunities.
Most commercial lenders talk about the importance of increasing "share of wallet" with their business customers. Few have the systems in place to effectively cross sell.
Too often, sales leads are passed to the appropriate area of a bank by chance. A business development manger will happen to run into a colleague and remember a lead from the recent past that he was unable to fulfil. He passes the lead on to his colleague and hopes for the best. Banks should not be reliant on this type of ad-hoc cross-pollination.
The sale of one invoice finance product to a business customer can typically be worth £3,000 per annum in operating profits. Over a five year period that represents £45 million of extra profit to a bank with 1,000 new invoice finance facilities per year from its existing base of business customers. The imperative for effectively cross selling seems obvious. Why cohesive systems are not in place is not.
The solution for most banks: bridge the silos. Implement a web-based system to link together the various and disparate systems. Such a system is relatively cheap and easy to implement. It can also be very effective - speedily moving a bank from the 1970s into the 21st century.
Web-based architectures are relatively inexpensive because they do not require old software to be replaced or re-written. Instead, new web-based software creates bridges that link the existing legacy systems together. The new, web-based software works as a conduit, enabling each of these old systems to communicate coherently with each other.
In addition to binding varied systems together, the bridging software can comprehensively collate customer data from different parts of the bank. It can then analyse the data to measure the propensity for a range of higher-margin financial products. While developing this type of software is a complex process, implementing it is not.
The result: leads gathered by one silo can be used by another. Once acquired by one part of the bank, the customer does not need to be re-acquired by another silo. Software collects and analyses the information, enabling humans to focus on selling. Each silo also acquires new customers to which it wouldn't otherwise have access. The bank expands its share of wallet with the customer. Profits are maximised.