Designing Digital Services in Retail Banking

Prof. Dr. Alexander Mädche

InES Symposium

Mannheim, November 5th 2014

Digitalization in Retail Banking – Evolution or Revolution?

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Evolution

Technological change did continuously impact Retail Banking

1970

Automated Teller

Machines

Phone Banking

Automated Money

Transfer

1960

Debit Card

Revolution

But: Technological change is speeding up …

… in parallel pressure is growing:• Reduced incomes• Cost pressure• Customer needs & expectations• New market participants

2000 2010

1980 1990

Service System

The Bank and its Customers – A Service System

Service System:

The Customer and the Bank establish a

service system characterized by co-creation

of value and context orientation (value-in-use

and value-in-context).

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Bank

Customer

Bank:

The Bank is a socio-technical system

consisting of an organization (O), technology

(T) and individuals (I).

O T

I

Challenges in Retail Banking Service Systems – Some Quotes …

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After the implementation of the new core banking system we could not work anymore.

I got interesting investment recommendations on Facebook from my bank, but at the branch they did not even have access to Facebook …

Well, there are things you think about. The new software is much easier, do we still need all people?

I provided all data for my building loan contract via mobile. However, when I went to the branch, they asked me to provide paper-based forms.

I triggered a 8,000 Euro payment and afterwards my account was locked, intelligent fraud discovery!

I worked three years in IT consulting in retail banking and never talked to an actual end user.Service System

Bank

Customer

O T

I

Synchronization on Different Levels Required!

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Organizational Level

Individual Level (Customer /Employee)

OrganizationalAdoption

Conversion(Implementation

Project)Use

Adaptation Behavior

Individual Adoption

Initial Usage

Continued Usage

Routinization

Infusion / Extension

Adaptation

Appropriation / Enactment

T

Transformation of Service Systems in Retail Banking

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t0

The transformation of a service system is a process involving all actions of customers and individuals in an organization leveraging technology to support the transition of from a configuration t0 towards a configuration tn.

Service System

Bank

Customer

O T

I

tn

Service System

Bank

Customer

O T

I

Enrich online/mobile channel

t1

Service System

Bank

Customer

O T

I

Integrate core banking platform

t2

Service System

Bank

Customer

O T

I

Enrich advisory services with customer intelligence

Standardization Differentiation

Three Buckets for Technology Investments

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Integration Intelligence Interaction

T

1 2 3

Bucket 1 – Integration

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1

Standardization Differentiation

Integration Intelligence Interaction

T

1 2 3

• Eliminate functional silos and simplify IT landscape

• Harmonize and integrate data and processes targeting process excellence

• Provide flexible IT platform

Objectives

• Implement standardized product software (core banking)

• Implement business process management platforms

• Implement service-oriented middleware

Technology Concepts

• Complex implementation projects do not deliver according to expectations• Effective use within post-implementation phase delayed or not realized at all• Shadow-IT due to technology misfits • Reduced flexibility due to strict governance

Challenges

Bucket 1 – Intelligence

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2Standardization Differentiation

Integration Intelligence Interaction

T

1 2 3

• Support better decision making within organization

• Measure and improve process performance

• Provide foundations for tailored customer services

Objectives

• Establish Business Intelligence platform (DWH, Reporting, …)

• Implement new Big Data (Analytics) technologies

Technology Concepts

• Data availability• Establish data consistency e.g., for internal and external reporting• Organizational structures influence decision making processes• Regulatory constraints• Privacy

Challenges

Bucket 1 – Interaction

10

3

Standardization Differentiation

Integration Intelligence Interaction

T

1 2 3

• Increase customer satisfaction and experience.

• Enrich existing channels and create new channels for intensified customer-bank interaction

Objectives

• Internet Banking• Mobile Banking • Social Media / Network Sites• Collaboration Services (e.g. Chat)• Multi-/Omnichannel Architectures

Technology Concepts

• Synchronization of the different channels • Bank internal challenges (budget distribution, organisational structure …)• Design for positive experiences requires holistic process thinking ( “customer

journey“)

Challenges

The Institute for Enterprise Systems (InES) at the University of Mannheim

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Selected PartnersResearch Team

Research Areas

Systems Engineering

Management of Enterprise Systems

Innovative Solutions

Central Institute at the University of Mannheim establishing an interdisciplinary platform at the intersection of business and technology.

• Online / Mobile Banking Adoption & Use

• Multi-Channel Design

• BI / Big Data Analytics Adoption, Use and Impact

• Process Intelligence• Intelligent Guidance

• Adaptation & Effective Use

• Business Process Management

The Banking Enterprise Systems Center of Competence http://www.banking-enterprise-systems.org/

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Integration Intelligence Interaction

User-Centered Service Design Processes

Research Focus Areas:

Complemented with education and networking activities, e.g. Curriculum Banking Enterprise Systems, Design Thinking Sessions, Industry Talks / Career Development and Public Events.

Agenda Symposium (1/2)

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Agenda Symposium (2/2)

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Thank you for your attention!

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Prof. Dr. Alexander MädcheUniversity of Mannheim | Business School Institute for Enterprise Systems (InES)L 15, 1-6 | 4th floor | 68131 Mannheim | Germany

Phone +49 621 181-3606 | Fax +49 621 181-3627

maedche@es.uni-mannheim.de http://eris.bwl.uni-mannheim.de http://ines.uni-mannheim.de

Creative Commons – Attribution (CC BY 3.0)

The Noun Project (http://thenounproject.com/)

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Customer-Centric designed by Javier Cabezas

Team designed by Murali Krishna

Microchip designed by Marcio Duarte

Flow Chart designed by Michael Wohlwend