Planning for Alternative Delivery
Over the last year, almost every strategic technology planning discussion or project in which I participated focused in large part on alternative delivery planning. Most banks are asking a variant of two questions: How do we decide which technology to deploy, and in what order, to generate the greatest positive impact to our current business model? And, in the future, how do we assess the new technology or functionality as it becomes available?
Creating and maintaining an alternative delivery plan that is aligned with the bank’s strategic goals can help answer both of these questions. Such a plan helps banks address the many factors that influence the allocation of limited investment dollars among a complex array of choices. A problem that can occur is the lines begin to blur between retail, small business and commercial users as customers ask for access to new features and functionality through alternative channels, which puts pressure on current fee structures.
For example, high-net-worth individuals may be retail customers but desire access to wire transfer functionality normally reserved for commercial clients, who pay a fee for the service. Meanwhile, sole proprietors, or small business clients, want to view both their retail accounts and business accounts in the same profile. While not all solutions are created equal, the latest offerings from vendors provide that needed additional functionality, though generally with greater cost.
An alternative delivery plan generally comprises the following four steps, with the first three necessary for the creation of the fourth:
- Perform an Information Technology (IT) staff and system assessment against peers and best practices. What is the state of your IT environment? Are there any gaps that need to be filled so that any strategy adopted by the bank can be supported by IT? Does the tech staff have the right makeup in terms of numbers and skill sets?
- Conduct a competitive market analysis focusing on alternative delivery offerings for retail, small business and commercial customers. What are local, regional and national competitors offering in terms of online banking functionality; mobile access and functionality; access to support through chat; call center hours and services; phone banking functionality; and the fees, features and number of ATMs? This analysis can also identify some quick-win opportunities, like bringing foreign ATM fees in line with the competition. The bank may be able to bring itself to par with the competition with modest changes to offerings.
- Create detailed strategic technology plans by business line. A three-year plan is typical, where the business lines, using their corporate strategic goals as a guide and with the help of IT, outline what they believe their technology initiatives and IT resource requirements will be over the period of the plan. IT uses these plans to address any existing technology gaps for the business lines. The technology plan also allows IT to predict and schedule the resources necessary for the new business initiatives to ensure their successful completion or implementation.
- Develop a combined, prioritized list of initiatives and a timeline aligned with the goals of the individual business lines. This is the alternative delivery plan. Using the bank’s strategic goals as a guide, the plan outlines what alternative delivery investments IT and the business lines will make to help the business lines meet those goals.
The newly minted alternative delivery plan can now provide a context by which all new technology and functionality can be judged. Questions to ask include: Does this new technology help us attain our strategic goals? Will customer acceptance of this new technology cause us to rethink our current investment priorities? How much time will pass before this new technology becomes a must-have for the bank, if ever? These questions and others can be answered relatively quickly by consulting the plan.
In an ideal world, the plan would be a living document, updated as quickly as business conditions and strategies change. In practice, updates do not happen that quickly. An annual review is best practice. The practice fosters greater engagement and communication between IT and the bank’s business lines – a win for all involved.
Alternative delivery channels bring both opportunities and challenges to banks. Creating and maintaining an alternative delivery plan that is aligned with the bank’s strategic goals allows banks to focus their investment dollars and IT resources on those technologies or features that will help them meet those strategic goals.
Mr. Daley is a senior consultant for Cornerstone Advisors, a Scottsdale, Ariz., based consulting firm specializing in bank management, strategy and technology advisory services. He can be reached at [email protected].