| Bridging
the Silos
 By
Thomas P. Johnson Jr.
Silo coordination is critical
if banks are to meet challenges such as Check 21.
When the e-commerce revolution burst
upon the scene in the mid-1990s, all of the talk about
the need to integrate the various operational silos of
the bank ceased to be theoretical. The industry recognized
that Web-based delivery hinged on support from all areas
of the company, requiring coordinated systems and management
practices.
Although the subsequent dot-com crash
cast a pall over many multi-silo projects of that day,
the need for coordination has only grown. Customer relationship
management, for example, critically depends on a blend
of people, processes and systems. Other examples include
the Check Clearing for the 21st Century Act, or Check
21; enterprise risk management; and product bundling.
Check 21 promises to hasten the transition
from paper to electronic transaction processing. Institutions
will need to coordinate myriad splinter operations as
they work to streamline traditional processes, introduce
electronic alternatives, and usher customers into the
new environment. Most large banks, therefore, have felt
the need to assemble corporate-wide task forces to oversee
the process.
Likewise, the recent surge in new regulations
has freshly driven home the point that financial institutions
cannot address compliance issues in a compartmentalized,
piecemeal fashion. More and more, they are including compliance
in an enterprise-wide approach to risk management.
Turning to retail banking, relationship-based
pricing and product bundling has great potential to improve
both customer satisfaction and relationship profitability.
This can only be achieved if providers can meld information
from various product silos and get those units to support
each other in designing the packages.
All of these examples underscore the
point that financial services organizations simply cannot
achieve many of their most important objectives if the
various functional areas operate in isolation. That leaves
the question of how best to balance the dual imperatives
of business unit focus and cross-functional coordination.
It's important to maintain the integrity
and momentum of the various silos because they are the
focal points in generating the revenues and enabling the
operations of the bank. For that reason "silo busting"
cannot be the operative phrase in fostering coordination.
"Silo bridging" is more like it, and this managerial challenge
requires a nuanced, rather than blunt-edged, approach.
In this light, the role of the senior
executive resembles that of a coach who must get all of
the individual players to perform well as a team. When
it comes to bridging organizational silos, team cohesion
rather than star power is the pivotal attribute, because
customer needs increasingly transcend organizational boundaries.
Mr. Johnson
is publisher of Banking Strategies
and president and chief executive officer of BAI.
Copyright © 2004 by Banking
Strategies, published by BAI.
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