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Future Banking

As other industry sectors are raising the bar in terms of customer expectations, banks must adapt quickly to a new paradigm of customer service. We spoke to Balazs Fejes of EPAM Systems about how outsourcing can give financial institutions more agility.

Customers no longer view banks as a breed apart; they increasingly expect financial institutions to be as customer focused and responsive as other services providers. As a result, banks must compete against the standards set in retail or air travel in terms of the quality and speed of service. In short, there is huge pressure to adapt the business model of banking.

“There is an accelerating change in customer demands, especially in retail banking, corporate banking and wealth management,” says Balazs Fejes, global head of banking and financial services at EPAM Systems. “Customers have new ways of interacting with service providers, and they are comparing banks not only with other banks but also with service providers in other areas of their lives. They want banks to be just as interactive."

The mobile and digital experience customers want is not available from most banks, which invested heavily at the end of the 1990s but have done so less since then. But customers now compare banks in terms of the other places where they spend their money, and they want the same personalised services, which means banks must use situation-aware tools to offer relevant choices,” he adds.

EPAM Systems is a provider of complex software engineering solutions headquartered in the US but known for its Central and Eastern European service delivery platform. It provides outsourced services for a large customer base across Europe and the US, which includes investment banks, retail banks, exchanges, brokerages, rating agencies and market data providers.

In helping financial institutions surmount many challenges, EPAM has evolved areas of specialist expertise that help clients address the rapidly changing parameters that are shaping customer experience and service quality in this industry.

“Customers want banks to use all the data and transaction history they have to proactively suggest options,” says Fejes. “They don’t just want e-banking as an easier way to fill out forms. The industry must move away from point of sale towards ‘point of need’. Customers want to use services when they have a specific need in order to achieve certain goals. Meeting those needs will enable a bank to differentiate itself.

“The challenge for banks is that interactive services will lead customers to use those services in ways that were not anticipated and they will want an instant response. That means banks must change how their application stacks are designed. Batch processes and mainframes won’t give the instant responses customers want,” he says.

Experts from the outside

The current environment in the financial services industry is challenging to say the least, with many factors conspiring to make it hard for banks to fund the development of the technology infrastructure that the new industry paradigm seems to demand. Banks must find cost-effective ways to bring about big changes.

"As banks deleverage and adapt to regulatory change, they find themselves short of funds to invest in the technology needed to meet customer-driven demands,” observes Fejes. “They also face competition from competitors that do not have legacy systems. Maintenance of legacy systems is very expensive so it could be cost-effective for banks to use third-party solution providers.

“Something needs to be done. Mobile technology is becoming pervasive, so people have higher expectations. The key is to have not only the right technology, but also the right people. You need access to the right skills, so one solution is to let a company like EPAM focus on the software engineering for issues like mobile competency and big data services.”

EPAM has followed a strategy of organically growing what it calls competency centres in mobile services and other specialisms. Drawing on years of experience developing products for software companies, it has accumulated knowledge in key areas like business intelligence, market data, capital markets and electronic trading, digital strategy and experience design, mobile, big data, travel, e-commerce, SAP and business analysis. This know-how has been drawn together to create toolkits based on domain expertise.

“The competency centres are built around knowledgeable people with real experience of delivering solutions,” says Fejes. “In the mobile services one, for instance, we would work first with the design competency centre to create designs for services that could be implemented quickly and yet go deep into the capabilities of the mobile interface. Then we would ramp up teams to deliver and deploy these solutions.”

Taking this route allows banks to maintain their legacy systems if they wish, and to focus on using the data they possess to define the types of service they wish to deliver through digital channels.

“Banks don’t use their data to the best advantage, but they could build more personalised ‘point of need’ services with the data they already have,” says Fejes. “For instance, in the UK, some people have to buy heating oil for the winter. A bank can analyse how much oil a regular customer buys and aggregate this cost across all customers who buy heating oil. Banks have commodity divisions, so they could buy that heating oil and sell it to their customers at a discounted rate.

“That could be a big differentiator, as it brings the bank to its customers’ point of need – the need to buy heating oil. Data could be used to profile customers and compare them with their peer groups, so there is an opportunity for banks to use big data to help customers make better choices. EPAM can help banks to understand big data and drive value.”

Know-how, expertise and experience

Big data is one of the many issues that banks must address quickly, though there is a pressing need for the technological understanding of its implications to be communicated to the people who steer the strategy of financial institutions. One of the key challenges is to bridge the gap between IT teams and the rest of the business.

“IT people in banks ‘get’ big data, but the decisionmakers in the industry need to understand it better in order to create the right business case,” notes Fejes. “EPAM has a huge big data practice and dedicated competency centre staffed by experienced people.”

In fact, EPAM Systems provides outsourced services in many areas with which the financial services industry typically struggles. It offers transformative services in big data and mobile banking, for instance, and can take on many of the aspects of customer service that go together to create a consistent experience across multiple channels.

“What might seem to banks to be minor details can, to customers, be differentiators,” explains Fejes. “For example, banks must cut back on those elements of customer service that people hate, like having to re-identify yourself, or customer service advisers not fully understanding their problems. People must not dread contacting their banks.

“Banks must use all channels to communicate with customers but they have to understand each touchpoint and the reasons for using it. They must aim for a frictionless customer experience across all channels, and we can help them to understand the different access points and how to carefully maintain them.”

The financial services industry is more familiar with outsourcing in the context of customer contact than it is in other areas, but its understanding of the outsourcing model at least prepares the way for engaging third-party service providers to address other key challenges.

Fejes builds a compelling case for outsourcing to be considered as a means of addressing issues like big data, multichannel service delivery and data analytics. Just as banks are increasingly judged by the standards of service and responsiveness set by other industries, so it could turn to service providers like EPAM that have honed their skills working with clients in these industries, and which can put that knowledge to use, to help banks understand and live up to the demands of today’s customers.


Original publication is here.