BAI Banking Strategies Article Shows Importance of Managing Complexity

Last Thursday’s post on ad hoc analytical systems prompted an interesting set of comments about overcoming product-based organization at banks. As it happens, the BAI’s online Banking Strategies magazine published a related article last November, called Uncovering the Hidden Cost of Complexity.

The article starts by suggesting that customer focus causes the product proliferation that makes good customer experiences so difficult to create: “As banks became more customer-focused over the last decade, they expanded their product set rapidly.”

This is an intriguing thought although it seems like blaming the victim for the crime. But after describing the problems caused by complexity, the authors move in the opposite direction. “The implication is not that banks should limit the variety of options to their customers, but that they should do the following” to ensure complexity adds value:

- Understand what complexity is valued by customers
- Quantify the hidden costs
- Identify the drivers and impacts of complexity
- Design processes to handle variety
- Innovate around advantages

You can read the article for the details. I’m not sure whether complexity is a problem in its own right or just a symptom of other issues. But I do agree with the authors' fundamental point that systems and processes must be designed to deal with complexity effectively. And I definitely agree with the authors’ focus on the quality of customer experience as the primary goal of each business. Any approach that starts from that premise can only lead in a good direction.