Technology is supposed to help businesses accomplish more in less time, still many a financial services merger or alliance has been bogged down in months of work just to get back-end systems to talk to each other.
Executives from about 30 top financial services firms are scheduled to meet this morning at Citigroup's corporate auditorium in New York to consider establishing a standards-setting organization that would craft voluntary guidelines for basic back-office technologies: check processing, call center and transfer agent operations, claims processing, and the like.
The idea is to make these systems interoperable, so that organization members could plug into one another's systems with minimal effort. If companies' technologies were easy to connect, they could more easily hire outsourcing vendors, complete mergers, or collaborate in other ways.
Other possible benefits could include streamlined activity among departments, better service for clients and investors, and easier compliance with regulators, proponents say.
"The major benefit of standardization is to provide the financial services industry with a much more common language to provide benchmark data for common processes," said Len Farano, quality director for emerging markets at Citigroup Inc.
Companies with reservations about the standards would not have to join, the organizers say. Potential objections might include the cost of adapting to a standardized system, or fears about the compromise of proprietary technology.
Supporters of the proposal include Mellon Financial Corp., the Federal Reserve Bank of New York, Credit Suisse First Boston, and Standard Chartered Bank of the United Kingdom. Executives from each of these companies will speak at the half-day conference.
The sponsors of the event, called the ISO/FS 9000 Quality Awareness Conference, are the accounting firm KPMG LLP and the consulting firm Productivity Resources LLC. Citi is merely making space available.
The two sponsor companies propose to name the standards-setting entity the FS 9000 Association, because it would be guided by the International Organization for Standardization's ISO 9000 standard. They say they can move forward with the support of 10 to 15 financial services firms.
George Wagner, a partner at Productivity Resources, of Virginia City, Nev., said standardization is crucial because it "ensures the way an operation is done is properly documented." His firm would like to manage FS 9000.
Ernie Emmerling, project manager at Mellon's global cash management division, said the proposed benchmarks would lead to "process improvements of the entire business management structure," from "corporate policy to front-line work instructions." Companies would be able to see how their processes stack up against peers', he said, and quarterly performance metrics could be published for each function.
"If the numbers are good, management may choose not to invest as heavily in that operation," Mr. Wagner said. "If not, they know they need to make changes in that area."
Standardization would also make it easier for banks to outsource, said Brian Hettrick, senior manager of financial services at New York-based KPMG. As things are now, "when we outsource something to another firm, we have all of these people checking and double-checking the numbers."
Technology vendors would be welcome in the FS 9000 Association, but not in its standards-setting committees, Mr. Wagner said. "We don't want vendors, because we don't want their agenda to taint the proceedings with bias toward their products," he added. "You want the core companies setting the standards."
The FS 9000 Association, which has no members signed on officially, would finance its activities through dues and certification fees.
Mr. Farano of Citigroup said that quality, service, and delivery should be "something expected and not perchance. We know that standardization helps that."