City looks to IT for insight

The City still needs IT professionals with good commercial instincts

The effects of the credit crunch make it more important than ever that IT professionals in banks and other financial services firms hit their cost-efficiency targets. It also presents a golden opportunity for IT to act as a strategic partner for other parts of the organisation, and to assist them by enabling revenue generation.

Experian is in close contact with more than 600 financial organisations around the world that rely on its range of consultancy, analytical methodologies and decision support software.

The current climate is causing many of those financial services organisations to place greater focus on their customer management and collections strategies. The purpose is to maximise the growth opportunities in their client portfolio and ensure they collect all the revenues that are due.

While this process tends to be initiated from other parts of the organisation, IT is increasingly playing a critical role in driving these activities.

The massive changes to internal processes and IT systems that financial services organisations made in line with Basel II regulations, to enable them to profile and monitor exposure, were primarily for compliance reasons.

This provided the basis for a more complete understanding of customers. Experian is now ensuring that the capability is embedded and used effectively.

Customer management is becoming a vital area of focus for all firms, especially those in the financial services sector, as they look to retain their most profitable customers. Organisations have more information available to use in decision-making processes from customers, that allows them to deliver tailored strategies.

From a risk perspective, it is essential that lending and customer management decisions are based on a complete picture of the customer to drive appropriate, responsible decision-making. The strongest indication of future behaviour comes through combining all data about a customer, including cashflow and card spend. Often, however, information that can add significant value in helping to make these decisions exists in silos. This is a key challenge for IT to address.

Organisations are turning to IT to implement systems that analyse customer information to find the most appropriate way of managing debt.

Again, IT plays a key role in helping the organisation to overcome silos to gain a holistic view of the customer’s payment performance.

This new focus will not radically alter the skills implications for IT professionals, which are already changing, but it will provide greater opportunities for those who are more rounded and have greater business capabilities.

While it remains essential for IT professionals to have the core technical skills, commercial awareness and the ability to communicate and influence at all levels are important.

Furthermore, IT has to achieve a balance between the running costs typically associated with large legacy systems, and the level of customer insight required in today’s market.

The traditional issues, such as compliance and data security, that financial sector IT professionals have always been focused on, remain imperative. But the IT department has an even more crucial role to play ensuring that the capabilities and information assets held by the firm are being used to their full potential.

IT has never had a greater chance to help define and implement the strategic direction of financial sector organisations.

Gary Wood is UK managing director at Experian Decision Analytics.