For well over 50 years the function of account analysis operated the same way, even while other functions underwent transformation. Most banks viewed it as just an essential process for creating and delivering accurate, error-free invoices to corporate customers. But in the current market context, a modernized account analysis function that can deliver real-time account balance information, enable accurate cash flow forecasting, and ensure seamless fee renewals can be a game changer. This is because customers today expect greater transparency and control over their banking experience. Modernizing account analysis is the need of the hour, but how can banks do so with minimal disruptions to business as usual and what are some of the roadblocks they may face?
The State of Account Analysis Today
Before we dive into the how of account analysis modernization, we must consider the current state of account analysis today and how prepared banks are to meet customer expectations. 6 out of 10 banks know that real-time account balance information is essential, but only 41 percent banks can deliver this feature. Almost half of the banks surveyed by American Banker in association with SunTec say that error-free billing is critical. 49 percent stress the importance of cash flow forecasting, but only 38 percent can meet client requirements on this front. And 46 percent say that transparency is important, but only 32 percent can deliver it. Almost half the respondent agree that their account analysis processes are frustrating for their customers. What is important to note here is the fact that most banks today understand the importance of taking account analysis beyond just error-free billing and delivering exponential value to customers.
Three Key Challenges for Account Analysis Modernization
So, what is holding back banks from modernizing account analysis? The first challenge that banks face is that of perception. Account analysis is an integral and crucial part of the business of banking, and it has worked the same way for over five decades. Asking a bank to change it may seem as impossible, complex, and risky as ripping out and replacing core banking systems.
Closely aligned with this is the question of change management. The function has worked in a set way for decades. Implementing even the smallest of changes may become a significant challenge for many banks. For banks, this challenge is twofold, first there is the matter of reshaping entrenched billing practices, and second, standardizing processes, products, and structures across the ecosystem. A modernized account analysis function calls for cataloged products, billable codes, and pricing structures, but this shift from legacy operations to a new standardized mode may present significant cultural and organizational challenge.
And finally, there is formidable challenge of integration. Account analysis needs to collate data from disparate source systems across the bank. This is a complex and critical task and introducing a new data source not only burdens the IT team about also requires meticulous reconciliation for accurate billing. Modern account analysis solutions must be able to integrate data in real time, and many banks are adopting new methods such as streaming-based integration or online integration via APIs. The integration conundrum underscores the need for seamless interoperability and data fidelity.
Addressing the Integration Challenge
The integration challenge is further compounded by the way banks think of integration within the account analysis function. In the legacy format, banks work with monthly, or even daily batch feeds. This is the most common way that an account analysis solution uses data, and this is how most banks think data must be consumed for this function. But a modernized account analysis solution needs to take in data on a near real-time basis. This is achieved with newer integration methods such an API integration and streaming and is crucial for allowing the bank to provide dynamic, actionable insights to clients. The integration extends beyond mere data consumption, empowering banks to enhance customer experiences and operational agility. For example, many banks use CRM systems to onboard their clients. And as part of this system, clients must be able to enquire about applicable packages or bundles, and preferential pricing based on their relationship. A modernized system does not just look at data consumption but also could expose data onto a CRM channel or an online portal. This will enable customers to directly understand their account analysis statement, or get a real-time view of fees, charges, and balances.
Taking a Phased Approach to Mitigate Risks
Minimal Viable Replacement (MVR) is an effective way of actioning complex transitions which prioritizes high-value use cases over incremental enhancements. In other words, instead of the easiest of use cases that cater to a smaller segment of customers, the account analysis modernization effort identifies the most valuable or difficult use case that caters to most customers. This is perceived as a considerable challenge by most banks. But this can be handled seamlessly with a well thought out phased approach. By targeting critical functionalities, banks can mitigate implementation risks and demonstrate tangible returns on investment. This strategic approach paves the way for iterative modernization, fostering adaptability and mitigating disruption.
There are different methodologies that can be used as well, such as considering capabilities and working out a plan to enhance existing functional capabilities. For example, managing rates better is a key objective for most banks. This could be earning credit rates, hard interest rate on a hybrid account, or the interest rates on relevant products. Some banks are opting for shorter implementation projects, lasting three to six months, to quickly integrate modern solutions for rate management. Others are taking an add-on approach, adopting new platforms to address specific billing use cases, such as business banking billing or carbon offset products, before fully transitioning to a comprehensive account analysis platform. These strategies aim to demonstrate value and return on investment before committing to larger-scale implementations.
Accelerating Innovation with SaaS
When it comes to deployment, most banks are relying on Software-as-a-Service (SaaS) models for transforming account analysis. The agility, scalability, and cost effectiveness of SaaS models are a game changer. And it offers multiple benefits ranging from accelerated onboarding to seamless maintenance and feature updates. By offloading infrastructure concerns and streamlining maintenance, banks can ensure faster time-to-value and stay ahead of evolving market dynamics.
As banks embark on the journey of reinventing account analysis, addressing technical challenges is imperative for success. By redefining perceptions, embracing change, and adopting innovative integration and deployment strategies, banks can unlock the transformative potential of a modernized account analysis function. The path forward demands a holistic approach, blending technological innovation with strategic foresight to shape the future of banking.
