|
The Scope of Howbankswork
On this page you will find an explanation of what each area of the Banking Framework (shown on the Framework page) actually relates to. Select one of the operational areas listed below to jump straight to an explanation of that area.
Branches
Networks of physical buildings in towns where the general public can walk in to obtain sales and service. Often a branch can be thought of as having three sub-channels;
- Teller positions for payment
- Query desks
- A place to meet qualified “Tied Sales Force”.
This is still a crucial point of service delivery for banks.
Electronic
This includes a number of different areas that all have the common theme of the customer dealing directly with bank software rather than bank people. Sub-channels include:
- ATMs - Traditional cash machines and other specialised information terminals in public places such as bank foyers, railway stations, etc.
- Internet - Provision of product services to personal end users over the internet, including the ability to make instructions to the Financial Services Group. Examples include Internet Banking Services, Internet Insurance quotations and claim services and Portfolio Management information.
- Corporate Electronic Banking - Similar to Internet Banking in providing information and the ability to make instructions via computers in the customer’s site. Different in normally being more demanding in terms of security, controls, volumes of data and the need to support multiple users at a single customer site in different roles (e.g. authoriser versus in-putter).
- E-Mail - A vehicle for customers to send information to/from the Financial Services Group. It can be more or less secure.
- ITV - Similar to Internet Banking but for Interactive TV and its associated protocols and user experience.
- Mobile - Similar to Internet Banking but taking account of the limitations and protocols of the mobile phone.
Taken together this is a very important and growing element of service delivery for banks because it can lead to Straight Through Processing (STP) - i.e. without staff manual intervention - this is seriously low cost for the bank.
Phone
The way the Financial Services Group handles phone calls, both incoming and outgoing. Can include Call Centres, Call Routing, Telesales and Interactive Voice Response as well as computerised response to “push buttons” on the handset. This is another fundamental area of service delivery for banks.
Mail
Customers still send thousands of letters a week to large financial services organisations and conversely financial groups send millions of letters a week out (statements, letters, etc). The inbound mail is usually a service trigger. The outbound mail (e.g. a credit card statement) is often the principle window for the customer onto the bank’s activities with errors and corrections usually very visible.
Tied Sales Force
A sales force that works only for the Financial Services Group (or more usually a part of it). They can be employed by the Group or be independent and / or commission only. Normally they are not relevant to service delivery but can be an escalation point for customers with complaints. In the banking area the Relationship Managers that deal with business and high net worth individuals often get involved in service delivery by being the “first point of contact”.
Brokers and Agents
These salesmen are independent of the bank and work on behalf of multiple Financial Services groups. Although important in service provision in some areas such as insurance, they are not material for service provision in banks at the moment. In the future, this may change (e.g. the use of Post Offices as banking services outlets).
Back to the top
Customer Risk
For Credit Products this relates to how much the Group is owed by a customer and what the risk of default is. This should be managed outside of the individual lending product areas;
- Personal – Banking, Credit Cards, Mortgages
- Business – Banking, Asset Finance, Capital Markets
Similarly once a customer is in default, the recovery process should be undertaken on a Group-wide view.
For Insurance products this relates to the expected value of claims aggregated over the different insurance products.
For both classes of product there is also an assessment as to the likelihood of fraud.
Customer Static
Master information relating to customer data ought to be clearly known.
- Personal – e.g. name and address, relationships
- Business – e.g. legal entity hierarchies
This data is typically stored many times in many product engines in a large financial services group, normally incorrectly in some of them.
Contact Management
An individual customer talks to one institution/brand about a number of products and services and will do so through several delivery channels and will probably have to talk to multiple departments. Furthermore, “things” may happen to the customer (e.g. receipt of a very large payment). Bringing together the entire customer “contacts” and “events” into a group level customer contact system is an important aspect of providing service.
Back to the top
Most Financial Services products require a combination of back office staff and complex computer systems to set up and maintain the particular product or service for a customer. For example, Customer Accounting systems in banks and Life Policy systems and processes for the life assurance industry. These systems are often the heart of the “legacy software” that users and IT professionals find frustratingly inflexible. The following are a classification of the product/service areas.
Core Banking
These are the activities of a typical commercial bank that has both personal and business customers;
- deposits and savings accounts
- personal and commercial lending
- payment services including direct debits, cheques, cash, High Value payments and currency payments
- Trade products such as Letters of Credit and international Bonds and Guarantees
A number of “banking” products are included in other classifications below. See Asset Finance, Cards, and Capital Markets.
Insurance
These are all the areas of personal and commercial insurance broking and underwriting; including -
- Life Assurance
- House Insurance
- Motor Insurance
- Health Insurance
- Commercial Insurance
- Loan Protector Insurance
- Specialised Insurance (Marine, Aviation, etc)
A specific Financial Services Group is unlikely to be undertaking both broking and underwriting, nor is it likely to be selling all the insurance types (particularly not the specialised ones) but it will have several product engines covering some of these areas.
Asset Finance
These are the services such as leasing, vehicle finance, debt factoring etc. They normally have quite distinct back office processes and supporting IT.
Capital Markets
These relate to the wholesale market in money, currency, bonds, securities and the derivatives of some of these. Again, there are a number of specialised back office/system combinations that add up to product engines very distinct from those in the other areas.
Fund Management
The activities related to managing funds on customers’ behalf, be they retail or institutional, and be the funds actively or passively managed. Also included in this classification are the activities that relate to custody, bullion, Trusts, Executorships and portfolio management.
Cards
The engines required to support the key credit and debit card processes:
- Card issuing, to both individuals and companies
- Merchant acquisition
- Credit and Debit Card payment processing
Mortgages
The engines required to support the set up and management of loans against personal property. With the advent of current account and offset mortgages this area is rapidly moving back to being part of the banking engine.
Stock broking
This relates only to the execution of services provided to the retail market. Taking a position or acting in the primary market for new issues is regarded as part of Capital Markets above.
Back to the top
This area of activity corresponds to the interaction of a Financial Services Group with counter parties for the provision of a service to a customer. Many financial services require the co-operation of ostensibly competing companies. These are often highly automated and use industry standard Gateways.
Examples include:
- SWIFT
- CHAPS
- SWITCH
- SOLO
- Bankers Automated Clearing Service (BACS)
- VISA
- MASTERCARD
- CHEQUE CLEARING
- CURRENCY CHEQUE CLEARING
- Continuous Linked Settlement (CLS)
- LINK
Back to the top
This set of activities is all about deriving information from the activities in the other parts of the diagram. Financial Services Companies are heavily regulated. In addition to the statutory reporting of all quoted companies, they have to provide regulatory information to:
- Government Tax Authorities - Information on customer tax withheld and country of residence of customers
- Government Security Services - Information on Suspected Terrorists, Money Laundering and Fraud
- Central Bank and Financial Services Regulators - Information on credit exposures, capital adequacy and liquidity
Finally, since the raw material, work in progress and finished goods of financial service groups is information, it lends itself to the production of management accounting information. As a consequence, Financial Services Groups have very large databases for analysing assets, liabilities, costs and income as well as non-financial data for a variety of marketing and other management needs.
Back to the top
|
