MIS in Banking Automating Key

MIS in Banking

Automating key processes that provide immediate benefit to customers while also significantly reducing operating expenses is one of the most effective Management Information Systems (MIS) strategies there are in the American banking industry. The use of Web-based technologies specifically is delivering higher revenue, greater customer satisfaction and lower costs, resulting in higher Return on Investment (ROI). The intent of this analysis is to evaluate the three recommendations of monitoring clicks for online banking, enabling automatic transfer of money from savings to checking accounts, and support of transfers between different bank accounts from different banks. The impact on revenues, fixed and variable costs, the initial investment required, training considerations and implementation schedule will all be analyzed. In addition the implications for customer acquisition, customer retention, and customer satisfaction will also all be assessed.

Assessing Recommendation Costs and Benefits

The first recommendation of monitoring clicks in online banking has a spectrum of potential solutions, with Google Analytics being free for use and advanced, enterprise-wide Web-based analytics applications including Omniture and SAS have licensing and usage frees associated with them. The recommendation states that online banking will be used as a means for better understanding the needs of customers so incremental services can be produced. In addition the goal of creating more efficient customer service strategies is a consideration in the defining this recommendation. It is recommended that Google Analytics be chosen for this specific first recommendation due to its cost and its flexibility in capturing the customer data of interest. The second recommendation of being able to manage automatic transfers of money from savings to checking accounts within the same bank can be accomplished through a variety of approaches. From the low-end of creating an adapter or connector to integrate systems internally to accomplish this will cost $40,000 to $50,000 and have minimal costs with maintenance. At the upper end of the potential technological solution for this recommendation, the development of an Enterprise Application Integration (EAI) layer to integrate all systems together would be close to $1.5M to $2M. The costs are exceptionally high yet the system-wide integration would open up entirely new approaches to managing data and creating services for customers. As costs are a consideration, it is recommended that an adapter or connector is created internally by the MIS and IT teams to ensure that there is support for its capability while keeping costs at a minimum. The third recommendation of being able to transfer between different bank accounts from different banks also has a spectrum of potential solutions. From the low-end where an XML integration adapter or connector could be created to support interbank transfers securely to the development of an Electronic Data Interchange (EDI) over the Internet, interbank integration can become exceptionally expensive to implement and manage. An XML adapter or connector will typically cost around $50,000 to $75,000 depending on its complexity. At the high end with an EDI link over the Internet, costs can easily approach $225, 000 to $300,000 as there are dedicated EDI links that must be leased from $75,000 to $100,000 a year alone. It is recommended that XML links be defined and managed between banks where shared customers have the majority of their accounts. This type of alliance is common in the banking industry and is also making XML-based interbank networks more common. This is a direct result of the costs of EDI networks of the Internet continually increasing in cost.

Recommendations' Impact on Costs, Investment, Training and Customer Strategies

The first recommendation of enabling the monitoring of clicks in online banking to gain greater insights into new services for customers while also augmenting and strengthening customer service will have a long-term effect on revenue of minimizing customer churn, or the incremental costs associated with customers leaving the bank. Using click monitoring and applying Web analytics to the data will also provide useful insights into how to create entirely new online and in-bank services as well. Assuming the increased attention to customer satisfaction saves at a minimum just 10 accounts, this will be worth approximately over $200,000 over the life of the accounts assuming a modest level of financial activity per account. The fixed costs of this recommendation are none as Google Analytics is free and the incremental IT-based costs of maintaining the linked code and the internal training could be covered by Overhead Cost Allocations already made to spread operating costs across the bank. The significant revenue upside is the potential for customer acquisition, customer retention and customer satisfaction from creating services that better align with the needs of customers over time. Differentiating banks' services on the ability to offer services that are more closely aligned to their needs than competitors can be a significant source of revenue over the long-term. Using Google Analytics as the basis of the strategy to complete this first recommendation and then using the knowledge and data to differentiate marketing strategies to increase sales and increase customer satisfaction is possible using the data collected.

The second recommendation of automatic transfer of funds between savings and checking accounts would require an initial investment of $40,000 to $50,000 and would also have the incremental costs of training, development and code maintenance underwritten by the Overhead Cost Allocations. As this would save customers collectively hundreds of thousands of dollars a year and also promote the bank's brand, the potential impact on new customer acquisition is very significant. As every other bank uses these fees to incrementally gain greater fees, a bank that did not do this would be seen as considerate of customers and would therefore have an exceptional level of interest and support in the customer base. As these fees continually are escalating causing customers to leave banks over them for others, the potential for customer retention by doing this and increasing satisfaction would be exceptional. The value of the public relations alone would be well worth over $200,000 in advertising spending as no one is doing this today. The cost of the adapter and the benefits it would deliver would be worth the investment. This would be so groundbreaking in the banking industry it might even be reporting on CNN and other news networks as the U.S. Congress is now investing these fees to see if they are valid and reasonable or not.