Business today, both inside banking and out, has become a heated battle between brain and brawn, between nimble Davids and growth-hungry Goliaths.
The story goes like this: A mature company faces narrowing profit margins and increased competition. The pundits declare that survival in the industry requires economies of scale that can only be achieved through massive consolidation. Megamergers ensue.
Meanwhile, revolutionaries outside this chaos take a clean look at supposedly mature industries. They realize that current margin pressures are the symptoms of an obsolete business model. Quickly and deliberately, they reinvent entire industries while traditional competitors stand in awe.
Examples of this outside of banking already abound: Small, efficient mini-mills are running over U.S. Steel, and micro-brewers are eating into the market shares of Anheuser-Busch and Miller.
And so the story will go in financial services. It will not necessarily be the largest competitors that ultimately lead the world of banking into the next century-it will be the most innovative. Skill will prevail over scale any day.
In this intense fight between brain and brawn, client/server technology will be a primary weapon for the focused Davids of banking.
Despite the hype and frequent misuse of the term, client/server computing offers bankers tremendous opportunities to carve away at the obsolete ways in which they do business.
The benefits of client/server technology can best be summarized as follows: In the future, the ultimate value of a bank will be determined by how quickly and efficiently it can access, share, and improve information.
The attractiveness of client/server technology is that it actually does many of the things bankers have been promised by technologists for decades. Here's a brief sampling of the three major benefits chief executive officers can expect from client/server technology:
Employees are freed from wasting time.
Despite cost cutting, reengineering, and heavy technology investments, CEOs might be surprised how much time still is wasted within the bowels of their organizations.
This wasted time is not the fault of lazy or insubordinate workers. Rather, it is due to employees' continued frustration working in disparate and bureaucratic information environments.
Study after study in the banking industry has concluded that bank employees spend an inordinate amount of time on nonproductive administrative tasks.
To verify the studies' findings, CEOs should wander through the cubicles and desks of their operations. They will see workers tapping their fingers impatiently as they wait to log out of one system and onto another. They will see yellow sticky notes everywhere that act as cheat sheets for obscure legacy systems. They will see information typed by one employee into a loan document system and then typed by another employee into the loan servicing application.
Because 75% of all bank customer requests are requests for information, CEOs are now realizing how urgently banks must repair their operations.
In a client/server environment, employees start to regain control of information. They can pop in and out of applications with the click of a Windows icon. They move information between business applications as easily as they move a graph into a word-processed document.
With client/server applications, employees throw all paper and fiche into a bonfire and instead access reports, documents, statements, and copies of customer checks from their workstations.
Administrative tasks are reduced to the minor activities they should be. Employees can spend more than 80% of their time dealing with customers or selling to new customers.
Management is freed from flying blind.
Who are your most profitable customers? What are your most profitable products? Which departments are wasting resources and which ones are using them wisely? These are questions that CEOs like to ask, confounding lieutenants who don't have a clue where to get such information.
Bank managers today are like pilots flying without an instrument panel. They do not know their altitude, their speed, or whether they are going in the right direction. Usually bankers have little time to react to the cliffs dead ahead as they come soaring out of the information clouds: "Holy cow! How could our earnings be down that much?"
With relational data bases, bankers have the ability to build real-time reports that allow for the active management of the business. This architecture also makes it easier for banks to slice and dice their organizational data and learn more about where value is being created or squandered.
Because client/server systems already operate in a data base format, no painstaking efforts are required to "get the data out of our systems" like so many bankers experience today.
The bank is freed to go on-line.
Here's the bottom line. The world is moving rapidly to a networked economy fueled by information technology. If your business is not active on this network, it's dead.
In this new environment, small banks will recognize that technology can act as the great leveler. A community bank actively tied to the outside world may be able to access the scale and product sophistication of a Citicorp.
Picture a bank that buys and sells loans one at a time through a variety of secondary market conduits. Visualize a slew of happy customers accessing account information, statements, and check images directly off the bank's Internet home page.
These scenarios are possible today using client/server technology. All that is required is that bankers, technology vendors, and product suppliers work together to weave a new network of financial services-a network that provides greater value, convenience, and diversity of products than any single organization can offer.
This effort will require bankers to think differently about their strategies, demand stronger technical skills from their work force, and find a safe place to store all the money the bank will make. For entrepreneurial bankers everywhere, the network awaits!