Are you still having those days where things do not seem to be getting better? Is the “ladder of success” taller now? Regulated industries like Banking will struggle to climb any ladder. Why? The relentless burdens of regulations and high costs of compliance. Cloud computing and other Information Technology innovations can remove the taxing burdens of big government.
Read along for real examples of:
- Why the US banking industry will pass on regulatory and compliance costs to their customers.
- Innovation and automation can help save banking customers’ money by reducing fees.
The US Federal Government believes more regulations are better for the US banking industry. Protecting our national financial and economic health from overpowered financial institutions has its merits. However, new post-recession financial reforms are proving too costly, and harming economic recovery. Banks are increasing revenues to offset reform laws, auditing, and compliance related costs. How? By removing FREE from checking and savings accounts, ATM cards, and access to tellers just to name a few. Not long ago an IT Network Administrator called me about a recent IT audit at their bank. The findings were not shocking but one thing stood out about each of them – to comply they have to buy more stuff and spend more time monitoring themselves for things that most likely will never happen.
My client’s guaranteed payoff for complying? Spending less on driving value and more efforts on increasing fees and adding new ones. I swear some of the audit findings I read are the result of examiners having caffeine induced hallucinations and snorting toner. Cost is at the top of every decision making process today. When you raise fees to do business with you, should the customer expect a value oriented return?
Does this really mean banks must increase fees? Yes for shareholder expectations but overall, no. Bank of America would be our hero right now if they told the Feds “no” to excessive and unsubstantiated regulations. Do you think feds would shut down Bank of America? No, they are too big to fail and too big to close! This is where business-IT can eliminate the need for human processing to reduce costs and increase accuracy.
The enormous advantages of Cloud Computing in banking can slam the high costs of processing, monitoring and reporting any data stream. Automation can screen financial transactions, loan processing, risk management (business intelligence), and out-of-bounds teller transactions to name a few. Countless transactions can be automated as long as parameters are not changed at will and without oversight and reviews. Looking at this proposition deeper, does it mean the feds must expand regulatory bureaucracies using more people? Information Technology’s biggest payoff is doing more with less.
In the private sector IT Managed Services has systems monitoring other systems, automating traditional hands-on management routines, and firing off alarms when a threat is detected to name a few. Banking systems, transactions, workflows and compliance monitoring can be automated by reducing the need for people. Do you think there is a lack of vision and an “old school” mentality at work with the traditional banking model?
The cost of the Great Recession of the 21st Century is being passed on to retail and business banking customers. This same situation was crafted to pay for the Savings and Loan Scandal of the 1980s.
While private industry adopts advances in new Information Technology offerings, like Cloud Computing, the banking industry lags in innovation in part by the ever-changing regulations, and excessive associated costs. The lack of vision shuts out innovations to improve efficiencies, drive value, reduce errors and control costs. There are competitive advantages in using new IT innovations capitalizing on the hands-off approach to getting things done right.
Is your business over-regulated? How does it affect your business profitability? What innovative IT ideas are you using to help pass on savings to customers?
Learn more about Keith Nunnery and Acuity Information Systems & Consulting – SaaS, ITaaS, Cloud Computing and Business Consulting, IT Management, and Managed Services in Charlotte, NC & Las Vegas, NV
