Ladies and Gentlemen, Banks which do not make investments to take advantage of the new technology may find themselves losing customers to the better-quality or lower-cost products of banks that do. Investing in IT however, entails high cost and an uncertain payoff. The changes brought about by IT - new products, more sophisticated customers, changing cost structures, and enhanced competitive pressures - have all combined to transform the structure of the banking industry. And with further development of new technology, the industry will likely continue to evolve. Advances in IT have also resulted in new database technology and data-mining techniques that can expand the range of services that banks may offer their customers. The winners will be those who are able to harness on the capability of ICT in making strategic decisions - in terms of enabling better alignment of businesses, enhancing organisational capacity and capability such as in risk management, and building better customer relationships. Today, decisions on ICT investments demand a more thorough assessment, extending beyond the cost implications, to include better human resource redeployment, more efficient work flow process and system interface, expandability of the technology platform and the level of complexity to users and customers. BIS Review 33/2002  3  As banking institutions continue to adopt greater sophistication in the application of ICT, efforts must also be intensified to develop ICT-savvy employees and to increase customers’ understanding and acceptance of the new approaches.
The role of quality, and its inter-relationships with operational aspects of a service organisation has been expressed in what has been described as the “service-profit chain” as follows: (i) profit and growth are stimulated primarily by customer loyalty; (ii) loyalty is a direct result of customer satisfaction; (iii) satisfaction is largely influenced by the value of services provided to customers; (iv) value is created by satisfied, loyal and productive employees; (v) employee satisfaction results primarily from high-quality support services and policies that enable employees to deliver results to customers. Superior insights on customer needs will be an important advantage. This will involve recognising the diverse needs of the different customer segments. There is now already a discernable change in the pattern of customer behaviour. There is now an increasing shift towards a customer base that has less need for the standard distribution systems for most banking services. “If you build it, they will come” used to be the by-word for domestic banking institutions. A new branch would naturally attract new customers. Now, while customer relationship is of vital importance, these needs to be addressed in the context of the needs of the younger customers for retail services who do not want the “inconvenience” of a branch. The preference is for services as much as possible over the telephone, ATM or Internet. Writing cheques has become an inconvenience. This new generation of customers have their own ideas of what a bank should be and successful banks need to respond to this change.