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The Information FrameWork (IFW) - Executive Summary
Banking for On Demand Business
As the banking industry continues to deal with a fast pace of change, banks face stark new challenges. In today’s
marketplace, survival favors the agile; speed can be a critical differentiator; and the organizational status quo is often a
liability. Successful banks are beginning to adapt to continuous, unpredictable and accelerating change. Many banks
still struggle to manage a complex web of legacy silos, disparate systems, redundant functionality, excess capacity and
inconsistent service levels. Enthusiasm for IT spending and decentralization have exacerbated the problem, saddling rms
with overlapping – and often unproven – technologies. For many nancial services players, the results are all too familiar:
disjointed operations, redundant capabilities, inefcient cost structures and duplication of work across product, geography
and business lines.
Today, most banks still operate largely with a vertical business structure, where distribution occurs mainly by product silo
and operations are biased toward internally manufactured or developed products. Within this structure, making material
reductions in the cost base is difcult, and customers generally see very little or no differentiation among banks. Given their
nancial challenges, banks can now no longer afford to have capabilities duplicated across product silos, with each product
operating its own processes, systems and specic channels. This duplication has resulted in signicantly greater complexity
in banks, has impacted costs and speed to market, and has often increased operational risk.
In large enterprises, however, initiatives that have sought to optimize processes in isolation without merging them have failed
to fully address complexity and overlapping. Process optimization has generally focused on vertical integration and often
within single products or business units. To achieve a step change in performance, today’s highly complex banking operating
models must be simplied. Moving from process transformation to enterprise transformation is the key that will unlock
signicant benets for banks.
Technology is a key enabler, but IT decisions need to remain rmly rooted in the business needs of the organization. To
operate on demand, your organization will need to transform the way it operates by re-evaluating business processes as well
as the technology infrastructure.
Business Transformation
To best adapt to these emerging realities, successful rms are challenging their process-centric assumptions with a new
set of business transformation tools, and banks today are looking at their businesses from a different view according to a
Component Business Model.
Most nancial services rms know they need to change, but wonder if the analytical tools available to them are up to the
task. Traditional, linear approaches, such as business process re-engineering, have proven useful for optimizing workows.
Indeed, they often yield improved sub-processes, but they do little to highlight similar activities that might be scattered across
separate processes within the enterprise. Successful banks require a new way to view their business operations, one that will
help them adapt and thrive in an environment of continuous change.
The Component Business Model helps by simplifying the way banks look at their operations. Using it, executives can extract
themselves from the process “rut” and get at the real sources of value that drive their companies. With the Component
Business Model, they can identify the unique, standalone building blocks that comprise the bank as a whole. Viewing
business activities as autonomously managed components that can be optimized individually for greater value to the whole
business enables decision makers to cut through historical boundaries that may have built up along organizational, product,
channel, customer, geographical and informational lines.
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