CIOs in the financial services industry are looking to reposition IT as a hub of innovation, driver of enterprise-wide collaboration and provider of more sophisticated, brand-differentiating technology products and services. So says the Financial Services CIO Advisory team of New York-based PricewaterhouseCoopers, which contributed to a recent report on the subject.
The Financial Services Technology Journal holds that many financial services companies, including insurers, that restructured their IT departments to provide standardized technology services on a supply-and-demand basis have not realized the cost-controlling benefits they hoped for.
To control costs and offer greater flexibility to business lines, some financial services CIOs recast their organizations to operate as a technology services provider over the past several years. The intent was to help IT better manage increasingly complex responsibilities, reduce the cost of operations through economies of scale and benefit businesses by offering access to a simplified set of standardized services at the lowest possible cost. According to PricewaterhouseCoopers, the unintended consequence of this IT business model is that it has limited the ability of chief information officers (CIO) to be strategic business partners and diverted attention of the IT organization away from high-value contributions.
“When the CIO is perceived to be yet another external services provider, he or she is not positioned to influence the business vision and is left to play a reactive role, often mired in a conflict-ridden game of maintenance, margins and cost reductions,” said Julien Courbe, director of PricewaterhouseCoopers’ Financial Services CIO Advisory practice and executive editor of the Financial Services Technology Journal. “The IT organization needs to resist the urge of remaining 'business as usual' and refocus its energy and resources on being effective, innovative and strategic business partners embedded within the business units they support.”
The newly published issue of PricewaterhouseCoopers’ Financial Services Technology Journal covers three main areas of focus – business technology; people and organization; and behind the code. The following is a brief overview of the articles:
- Managing the mortgage meltdown: Leveraging technology to mitigate loan losses examines how innovative technologies can help financial institutions adapt to new economic conditions by reducing loan losses through extensive automation.
- Rethinking wealth management: New technology for turbulent times focuses on the use of innovative technologies to improve client retention and support while increasing the opportunities to close new sales.
- Adjusting the insurance claims process: leveraging technology to shorten cycles and reduce costs delves into the opportunities for insurers to streamline costly insurance claims processes and introduce new claims management tools.
People and Organization
- IT grows up: Building a mature management information capability focuses on the need to assess the maturity of the organization to manage innovation and chart the course toward a highly innovative IT organization.
- Managing the IT innovation life cycle: Lessons from product management provides considerations about enhancing well-established product management functions to become the driver of IT innovation.
Behind the Code
- Cracking the code: Using model-driven architecture to reduce software development costs shows how innovative ideas can reduce the cost of developing and maintaining applications without the need for complex governance frameworks.
- Connecting the dots: Mining the semantic web to detect trends and respond rapidly to market changes looks at possibilities for linking together disparate sources of data and mining them for insights by using autonomous software agents designed to identify data trends useful to financial services companies.
Courbe recommends insurers begin this process by looking the “people and organizational” aspects of their companies. “Greater innovations and business benefits come from a focus on the business technology domain. Benefits can best be experienced by changes people make,” Courbe says.
“The critical question for CIOs in the coming year will not be whether to innovate, but how to innovate effectively,” said Courbe. “Successful IT innovation management can help financial services organizations reduce costs and grow revenue and market share, even during challenging economic times.”
THis article can also be found at InsuranceNetworking.com.
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