Does your back office make mistakes, take forever to turn transactions around, lose things? Do you have to follow up to make sure things get done and done right? Does it make you look bad?
If your answers are “yes” or “often,” then you probably work at one of the banks and credit unions surveyed in Investment Executive‘s 2007 Account Managers’ Report Card. Judging by this year’s scores, you can take some consolation in knowing your situation is not unique.
Account managers almost universally deride their back offices. They blame high turnover, low morale and lack of training among back-office staff for their woes. But industry experts say it is not so much a human resources problem as it is a question of spending — and spending big — to upgrade technology. Whether the problem can be solved by addressing individual systems or by a radical overhaul of bank’s back-office networks with their labyrinth of legacy systems, experts disagree. But advi-sors and experts alike say the banks need to do something — and fast.
The problem the banks and credit unions face is that over the years, as they added product lines, the systems involved in day-to-day business expanded as well. It became the task of back-office staff to take information from one system and enter it into the next system. And this is where the potential for human error comes in.
“We have great systems,” says one CIBC advisor in Ontario. “They just don’t always talk to each other.”
Neal Oswald, a partner in the advisor practice at Price-waterhouseCoopers LP in Toronto and one of the authors of PwC’s Canadian Banks 2007 report, says there are opportunities for improvement. There are lots of business process management (BPM) software packages on the market that allow legacy systems to communicate, reducing cycle time, rate of error and increasing productivity in turn.
But relying on BPM software remains, in effect, more a matter of salvaging the existing technology than preparing for future problems. Sujan Menezes, industry solutions executive at Microsoft Canada in Mississauga, Ont., is of the opinion that connecting the legacy systems does little more than “make a bad process faster.” The alternative is to overhaul the system.
Many believe that consolidating silos of information and connecting legacy systems to generate efficiencies has run its course. According to Carmin Tullio, president of Toronto-based Univeris Enterprise Wealth Management Systems, the company that is responsible for Credential Financial Inc.’s back office — upon which both Vancity Credit Union and Credential rely — the next big advances will come from more radical changes spanning multiple systems.
The bigger the project, however, the bigger the risk to the banks’ leadership. It will be expensive. It will affect several business units at once. And what if it doesn’t work? But as advisors vent their disgust this year, it is clearly risky not to address the matter.
Why this year? Back-office scores on average dropped nearly a whole point overall. While Vancity’s rating held relatively steady, losing only one-tenth of a point, CIBC’s back office rating plunged by 2.4 points, Bank of Nova Scotia‘s by 1.8, TD Canada Trust‘s by 1.1 and Bank of Montreal‘s by 1.3. The category was listed among the worst aspects of all eight financial institutions surveyed.
There simply is no confidence in the back office. Advisors complain that the onus is on them to follow up and that back-office staff forget that there are clients at the other end of transactions.
One bank is addressing advisor dissatisfaction. Scotiabank introduced a new investment platform this year, creating a system whereby the advisor can prepare every step of the transaction and then send it to the back office, where “all they do is file the file,” says a Scotiabank advisor in Manitoba. But while some advisors relish the control, others resent the increased paperwork. The novelty of the Scotiabank platform may account for advisors’ low scores, but it by no means bucks the trend among the big banks.
Part of the problem is client expectations. People can buy a book online, pay for it with their credit card and have it on their doorstep the next day. “People expect the same level of online service from a bank as they get from Amazon.com,” laments Steve Guessen, chief information officer at Meridian Credit Union in St. Catharines, Ont.
@page_break@Menezes comes down on the side of the clients: “Technology is more capable today of keeping up.”
Meridian, which was not part of IE’s survey this year, is in the throes of a back-office upgrade, working closely with Credential. Meridian staff had been relying on fax machines, but are now building from the ground up, with today’s industry in mind. “We were lucky that it was so rudimentary,” Guessen says.
But the banks just don’t have it right yet. How do they address a technology problem with that scope of systems, of people, of tasks?
Oswald doesn’t entirely discount the human resources problem that advisors have described, either. As baby boomers retire, the banks lose their expertise and, in many cases, it was expertise that was learned on the job and is irreplaceable. The task in implementing BPM software is to capture those individuals’ knowledge and the tasks they perform to create effective software.
As such, it isn’t entirely clear what the next generation of back-office staff is going to do, regardless of whether the banks decide to overhaul various systems or connect them. Ideally, back-office staff will be monitoring and managing the system instead of executing each step, such as is often the case now.
But whether banks patch together systems or overhaul them, back-office work will be revolutionized and some people will be left
behind. IE