The retail banking industry is currently experiencing successes the world over. For example, in the US and UK, profitability remains strong, and prospects are also improving in Germany and Japan.
Having previously focused largely on internet and telephone based processes, there has been a resurgence in interest in providing better customer service and opening more branches with the intention of retaining customers and enabling the 'cross-selling' of products.
Retail banking has survived recent economic downturns astonishingly well, particularly in the US (from 1998-2004, only 36 of America's 9,000 banks and savings institutions failed).
The reasons for this include:
These factors, combined with an environment of low interest rates and a boom in mortgages and consumer credit have been good to retail banks. Even the Basel 2 capital adequacy requirements may mean a lowering of limits for low-risk products such a mortgages.
A more customer-centric, personalised approach can enable an organisation to maximise it's "share of wallet". Customer Relationship Management (CRM) enables this and is key to understanding the following:
There are many Enterprise Resource Planning (ERP) suites and CRM systems within the enterprise sector. This, combined with the robust, integrated ERP back office systems facilitates best practice in finance, human resources and risk management providing a major facilitator in gaining competitive advantage in this competitive sector.
The investment banking industry has had excellent results over the last few years. Organisations are reporting record profits, return on equity is running between 10-20%, and overall estimated earnings of over $100 billion have been reported in US banks recently.
In addition, the valuation of organisations is currently considered to be based on proven results rather than speculation; and 99% of banks are thought to be well capitalised by regulators.
These results have been achieved, however, in an environment of increasing levels of proprietary trading, i.e. banks speculating with thier own money. This is a consequence of falling margins and increased competition in traditional operations.
The industry has also seen widespread rising Value At Risk (VAR) levels - a figure intended to indicate the potential consequence of a financial disaster within a certain level of confidence. Although there is a much greater focus on, and quality of risk management, no model or procedure is, however, perfect.
What is required is an environment where experienced analysts can derive real value from these models via additional analysis (such as bespoke stress testing - i.e. modelling the impact of extreme scenarios and so forth). In order to do this a world-class systems infrastructure is required.
Traditionally investment banks have invested poorly in back office technology. The current surpluses being generated provide an ideal opportunity to address this issue. The establishment of an Enterprise Resource Planning (ERP) backbone provides the levels of efficiency and automation required in this environment.
ERP solutions provide a highly effective system in the investment banking sector, providing the opportunity to migrate to a single, global general ledger and implement best practice in key areas such as management and group reporting, production of daily profit & loss figures and of risk metrics.
In a fast-moving daily reporting environment, a stable, automated toolkit is needed to enable staff to concentrate on not only producing, but also analysing and interpreting financial, risk and regulatory data each day. ERP solutions enable the reliability required to implement this.
The recent economic environment of low-interest rates, and resulting consumer lending boom have meant good results in the retail banking sector.
A key approach to gaining competitive advantage, and therefore market share, in this industry is via the adoption of a customer-centric approach.
The leading Customer Relationship Management (CRM) suites enable the understanding of the following:
This, combined with a robust, integrated ERP system facilitates best practice in finance, human resources and risk management providing a major facilitator in gaining advantages in this competitive sector.
Recent results in the investment banking sector have been very strong. These record earnings, profit, and return on equity figures have however been produced in an environment of increasing risk and exposure to market volatility.
The results present a real opportunity to invest in leading back office technology to enable the automation of tasks in a reliable and efficient manner.
Enterprise Resource Planning (ERP) solutions facilitate the automated production of, for example, the following results:
In a daily reporting environment, the production of these figures should be seamless, thus enabling the time to analyse and interpret results and therefore effectively manage risk.