Outsourcing IT itself not the cause of bank IT glitches

I recently blogged the views of a banking IT professional in regard the recent major IT glitches at UK retail banks such as RBS and Lloyds Banking Group. He felt that outsourcing was a major contributor to the problems.

In this guest blog Neil Kinson, Vice President EMEA at Redwood Software, discusses how outsourcing is itself not the problem and looks at how process automation can help prevent problems at banks.

Service Error? Then don’t bank on keeping your customers

By Neil Kinson

“The recent spate of high profile IT disasters should serve as a wakeup call for the retail banking industry. Business processes are more connected now than ever before and poor customer service poses a real reputational threat, not least because customers often take to social media to vent and amplify their frustrations. RBS and Natwest learnt this the hard way, having been thrown into the media spotlight when customers were unable to use their credit and debit cards on Cyber Monday – the busiest online shopping day of the year.

When back-end failures have such a dramatic knock-on effect on frontline services, retail banks need to take action to stop system errors snow-balling. As the saying goes, a stitch in time saves nine – if banks can prevent problems happening in the first place, they will avoid greater complications further down the line, which require more effort to fix. So, what steps can retail banks take to future-proof their customer service?

Think about your legacy

We hear a great deal about ‘legacy IT systems’ causing bank glitches and outsourcing has often taken the blame for its associated problems with slow response times, lack of visibility, and human errors.  But, outsourcing itself is not the problem. The real issue is the siloed and fragmented approach we are seeing from banks towards their core processes. While outsourcing certainly brings problems such as slow response times and lack of visibility, these issues would not exist if businesses had the right processes in place. That is to say, where back office functions take place, whether that be on British or international soil, matters much less than how these processes are executed.

Your reputation precedes you

With reputations on the line, banks would do well to look back 200 years to the Industrial Revolution; a transformation from dependence on slow, manual effort, to a streamlined, automated assembly line process. By tightening up and automating core processes, such as billing and credit checks, retail banks can achieve greater control over operations and be confident in their delivery of consistently good service – there is simply less room for error.

Audit your business processes

Of course, banks could spend billions replacing mainframes, which are often aging and combine many legacy systems bolted and ‘patched’ together. However, it would be far more cost-effective for them to focus on ‘smart’ updates to their existing technology to meet overall business and customer expectations. If large banks are to protect their customers from the impact of IT failure, they need to carry out a critical audit of their business processes – get them working efficiently 100 percent of the time, both at the front end and the back end, and they’ll reap the rewards in accurate and reliable results.

Managing error by exception

Businesses hinge on having up-to-the-minute, accurate data and if retail banks are to prevent further technology mishaps, they need to automate manual checks for their systems in order to reduce the likelihood of human errors. If mistakes, such as the delivery of incorrect transaction information, can be easily detected then banks can act fast to resolve problems before they escalate. With IT teams focussed on winning back consumer confidence, tightly automated processes offer the solution by providing back-office stability to keep business and IT processes running smoothly so technical glitches only have to be handled on exception.

Ultimately, if banks are to sustain market confidence, collaboration across the business model will be essential. Maintaining customer loyalty relies upon delivering top-quality service, and system failures will only serve to break this trust. With all banks priding themselves on efficiency, transparency and reliability, reputations hang in the balance – act now, or pay the price later.”