Automation in Financial Services
This chapter addresses automation in the financial services industry with a focus on small banks and credit unions. The financial services industry includes all organizations that engage in or facilitate financial transactions. Automation is essential for
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William Richmond
This chapter addresses automation in the financial services industry with a focus on small banks and credit unions. The financial services industry includes all organizations that engage in or facilitate financial transactions. Automation is essential for these firms to both lower cost and differentiate their services. Small banks and credit unions are an important subset of this industry, with unique automation needs to enable them to compete with large, international firms. The chapter begins with a description of the financial services industry in general, then moves on to describe community banks and credit unions, how they operate, and the role of automation. The chapter then addresses two key automation areas for these institutions: their core systems that support basic account processing, and a key customer-facing system – Internet banking. Factors that drive success and recommendations for how to approach each of these automation areas is discussed. For these small financial institutions, successful automation of back-end systems depends on how they source the system, with outsourcing both raising costs and the number of channels through which they distribute their products. Successful automation of customer-facing systems, such as Internet banking, depends on
According to the North American Industry Classification System (NAICS) [91.1], there are approximately 500 000 financial services firms. This includes insurance agencies, commercial banks, securities brokerages, securities exchanges, and the Federal Reserve banks. These companies range in size from Citigroup, with almost US$ 1.5 trillion is assets [91.2], to the Wanda Michalenko Memorial credit union with around US$ 30 k in assets [91.3]. All of the firms in the financial services industry are information-based businesses, and the intangible nature of the products and services drives
91.1 Overview of the Financial Service Industry1614 91.2 Community Banks and Credit Unions ...... 1616 91.2.1 How a Retail Bank/Credit Union Works ......................................... 1616 91.3 Role of Automation in Community Banks and Credit Unions ................................. 1619 91.3.1 Definition of Success..................... 1619 91.3.2 Core Processing and the Role of Sourcing ............... 1620 91.3.3 Internet Banking and the Role of Adoption .............. 1622 91.4 Emerging Trends and Issues .................. 1625 91.4.1 Role of Integration ....................... 1625 91.4.2 Regulation .................................. 1625 91.4.3 Shift From Paper to Electronic Payments.................. 1625 91.4.4 Emerging Technologies – Web 2.0 .. 1626 91.5 Conclusions .......................................... 1626 References .................................................. 1626
getting their customers to use the system. Because of this, success is more of a management than a technical issue. The chapter concludes with a discussion of emerging trends, technologies, and issues.
the automation projects required to enable these businesses
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