Banks should devote more attention to big data, cloud computing and other high-tech tools that will help expand revenue and less time on cost cutting and other short-term gains.
Those are among recommendations of a new report from the consulting firm KPMG, which urged banks to focus on information technology that helps them attract new customers while warding off security breaches and meeting regulatory requirements.
"Banks must switch from a business strategy anchored in defense selling businesses, reducing headcount and offshoring, in order to cut costs to one centered on offense that is all about selling products and services that meet customer demands and needs," Brian Stephens, national leader of the banking and capital markets practice at KPMG, said in a press release Wednesday.
"The banks that embrace change and systematically transform themselves to become more customer-centric will achieve a competitive advantage in the marketplace," he says.
One way that banks can drive profits and develop customer-driven products and services is by improving their ability to analyze data, according to the report.
"For banks to make real progress in data analytics, executive leadership will have to make it a priority," the report says. KPMG suggests that management can make data analytics integral to their decision-making process "by managing, measuring and compensating employees, at least in part, on how well they use data to make decisions and drive business outcomes."
Banks can also improve customer service by automating internal processes, according to the report. Doing so allows banks to process transactions more quickly, satisfying customers and leaving staff with "more time on the high-value work that drives revenue growth."
The report further recommends that banks take advantage of cloud technology to avoid unnecessary costs for hardware and software and speed up the delivery of new products and services. But banks should approach cloud computing with caution, according to the report: "Banks must work with cloud service providers to make sure [data-control] issues and risks are addressed in their service contracts."