The trick for technology management in retail financial services has more to do with keeping pace with available technologies and having a review and implementation process that can keep up with and identify the successful ones, all in the context of a consumer base that expects its suppliers to be both conservative and stable at the same time.
From a consumer perspective, wholesale financial services is essentially invisible except when some major breakdown occurs, for example, Societe Generale (2008). Wholesale financial services represents the activities that either support the retail financial services industry directly, for example mortgage processing; or the activities of banks with respect to each other as buyers and seller of services otherwise known as ‘intra-market'. Wholesale financial services is fundamentally concerned with risk mitigation, cost reduction and the creation of straight through processing (STP) as we'll see in.
Lowering transaction costs and error rates in order to support a rapidly expanding interconnected network of institutions requires a focus on stability, standards and scalability in the management of technology. Wholesale financial services also faces challenges of course. The market fluctuates in a similar macro cycle to that of retail. Where retail services functions through humanist (large branch networks, many staff technology in support role) and through technologist (no branch network, all on-line, technology-driven) phases wholesale's macro cycle consists of consolidation (small businesses aggregating into large ones and new utilities being set up) and fragmentation (creation of centralised and decentralised business units).
So for example in 2008, we have a number of historical transactions and events taking place that put us firmly into the consolidation phase of that cycle. Bank of New York's acquisition of Mellon to form Bank of New York Mellon, Turquoise, Global Crossing and so on all support the case. Creating centralised global functions is not necessarily an end point in itself, that is. this is not a linear process at the macro level. These are very much cycles. Most commentators represent financial services globally as being ‘on a knife-edge'. There are so many factors that can affect the industry, that can push the entire industry into a different model. The difference is that, unlike any other industry, financial services underpins every other industry on the planet. If it wobbles, so does everything else. If the money system fails, we all go back to the stone age. So, it is vitally important to understand the morphology - structure - of financial services. The factors that affect those structures are embedded in the success or failure of the system. Since technology is employed in both retail and wholesale financial services, it stands to reason that technology and its management are of fundamental importance.
When we talk of morphology to understand how technology can be managed in this environment we need to have some picture about how the different parts look and are related to each other. As with any biological system, financial services has many different structures, the two top-level structures being those we've already described. shows, at the secondary level the available structures that support the industry. From a technology management viewpoint, these are essential to understand because they affect the way in which any given technology will be approached, considered, deployed and maintained. The equivalence to our biology metaphor is that the retail and wholesale environments are akin to the organs, where the body is the total environment. This lower-level morphology represents the cell structure supporting the activities of the organs. From a metaphorical viewpoint, this is useful because, for a technologist, its all too easy to get drowned in the detail of producing technology for technology's sake. The biological model forces managers to think about the wider context in which their work occurs.
There are four basic types of structure: tiered, layered, siloed and granular.
These can represent, among many others, business structures, departmental structures and market structures. Each of these structures has the possibility to communicate with any of the other types either physically as in a branch structure, managerially as in a reporting hierarchy or technologically as in a communications network.
So, when considering the management of any technological deployment, apart from thinking about the technology itself, its just as important to consider the environment as well as the morphology in which the technology will operate.
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