Cisco offers advice for turbulent times, writes Tony Waltham
James Greene, Cisco Systems VP for financial services. |
It is certainly not "business as usual" in the highly turbulent financial services industry and three key decisions need to be made over the next 12 months that will have a profound effect over the next three to five years, according to Cisco Systems vice-president for financial services James Greene.
In Bangkok to meet customers and to address a conference about profitable growth the other day, Greene said these decisions would be to think globally, to expand to embrace the so-called BRIC economies - Brazil, Russia, India and China - and for banks and financial institutions to put their customers to work for them, collaborating using social networks and Web 2.0 technologies.
Collaboration, particularly around mobile commerce, would play a key role at a time when customers were increasingly self-enabled, he said in an interview, adding that banks should orchestrate commerce and become "clairvoyant" in order to anticipate customer needs.
While the financial services sector is facing turbulent times, Greene sees an opportunity for banks in Asia, and in Asean in particular, to expand globally in a world that is no longer fully dependent on North America and Europe.
Thailand would probably grow its GDP in 2008 to five to seven per cent, he speculated. "India will be eight to 11 per cent. China, nine to 12 per cent, Brazil, six to seven per cent, so these are engines of growth that represent opportunities for so many countries and companies to expand globally and reduce the risk of any one country, in this case America, being financially quite turbulent," Greene said.
"Thank goodness the world has become truly diversified." The "Asian miracle" continued because "the engines of growth are indigenous, meaning local or in-country, and in-region," he said.
However, the next four to 12 quarters, particularly in financial services, would be turbulent, he predicted. "Can you imagine when these large financial institutions still have ambiguity into the valuations on their balance sheet? I have never seen anything like that," he said.
He believes that three years from now, the global economy will be better positioned for growth as a result of restructuring that occurs between now and then, while acknowledging "it will be unbelievably scary over the next three years," adding "you and I would be naive if we said anything less than that."
Greene said that acting on the decisions he outlined would determine the outcome of banks and other financial services here. On his advice to think globally, the Cisco vice president said for a bank here to think of itself as "an indigenous local Thai bank" would be "quite inappropriate because the distribution of a Thai bank has to be on a global basis to reach customers and the customer growth is occurring in BRIC."
And he pointed out that the emerging economies of Brazil, Russia, India and China would together account for 37 per cent of the revenue of the global financial services industry by 2015.
He also elaborated on the need for banks "to transfer the assets, people, process, content of the enterprise" to their current and target customers, explaining that banks would have to reach out to customers through other customers, who would talk to them, over shared networks, social networks and on-demand services, whether it was through a mobile phone or the Web.
He said that "business as usual" would be a recipe for poor performance because the "fault lines" that he had highlighted at the conference were unlike anything he had seen in 30 years. "Consumers are self-enabled. Technology adoption is occurring at a speed, particularly mobile commerce and mobile technology, at a rate we've never seen before."
Greene said that there was "an abundance of need" for companies, financial services and otherwise, to examine what models of business were going to allow them to be relevant to their customers "because the next 10 years will be defined really by this quest for relevance.
"How can a bank, a car manufacturer, Cisco, others, be relevant, on demand, to current and target customers?" he asked, adding that this implied that financial institutions were "becoming clairvoyant by being able to predict needs and orchestrate delivery of those needs, as opposed to what I and others call 'poke and hope.'
"If I poke around enough and say 'maybe you need a mortgage,' 'maybe you need credit card,' 'maybe you need a savings acount,' and hope you say 'Yes', that is a fairly anaemic way to be relevant," he said.
"So it's quite fascinating what's happening in business all over the world, where businesses are striving to use the network as a basis for being clairvoyant. And using that clairvoyance to sense and respond what's needed and to deliver at the point of need to the current and target customer," he said.
Greene said that war on the competitive battlefield would be waged on "how well or not companies allow customers in and outside of the company or enterprise to collaborate," adding that companies could not scale their business fast enough to get to all customers.
"They have to convert their customers into employees. And do that with collaborative technologies, social networks, Web 2.0 technologies."
Asked if he had some advice for technologists, Greene said the three key areas were collaboration and computing in the cloud, software as a service and services on demand.
Consumers and commercial customers were expecting services to be provided on demand at point of need and that changed everything for all of us that are in technology, he pointed out.
Mobility was also important, particularly in Asean, "Mobility needs to be front and centre to the equation of how technology enables interaction between the consumer and the enterprise and it cannot be viewed as mobile equals a mobile phone."
Asked to expand on that, he said that mobility meant that there were no borders and that people were not tethered to a physical device in order to compute, work or play and that small telepresence screens could allow others in remote locations to be consulted and an answer a specific question could be provided in such a way interactively, for example.
Collaboration was "the main event" and he said Cisco believed that collaboration technologies would have an impact on global commerce, how people lived, how they worked and played and this would have a far greater impact than that of the Internet over the period from 1995 to 2005, he said.
Greene said that technology investments should follow the 80/20 rule, meaning that 20 per cent of any business affects around 80 per cent of their revenue stream and were the pivot points in which 80 per cent of the revenue of a bank or an investment brokerage pivoted around.
"First and foremost, that 'technology is cool' is an opinion. Cash is a fact. So, No. 1, follow the 80/20 rule."
Next, he said, was to be sure that the technology recognised that interoperability or open standards was a prerequisite to adoption by consumers and commercial entities.
Technologists should also ensure that technology needed to move to where technology was bought on demand, or "by the drink" as opposed to purely a capital investment, he said.
"So when one of the banks in Thailand says I'm going to expand into Vietnam, I'm going to expand into Malaysia, they want to do that via operating expense as opposed to pure capital investment. And then look to the technology companies for a financial model of "I will buy your technology on demand and by the drink," as opposed to capital investment, knock on wood and hope the business stays good, bears itself out.
The governance by which the technology gets monetised was quite important, he noted.
Security was also very important and needed to become the glue that ensures the transparency of interactions - "person to person, object to object, company to company."In a recent survey recently conducted by Cisco and one of its partners, senior executives cited security and protection of the brand as their second biggest concern, after regulatory compliance and transparency, he said.
"It's easy to say 'I want to expand my distribution footprint, I want to be able to enter new markets, not with branches but rather through a mobile environment. I want to be a direct-based financial institution.'
"A more difficult challenge is, once you open up the enterprise, it becomes problematic and quite difficult to ensure 100 per cent of the time that 100 per cent of transactions and interactions are secure.
"Has Cisco figured out how to be 100 per cent, of course not. Has anybody? No," Greene said.
He added that Cisco saw an opportunity where it could "continue to raise the bar on the security architecture that will allow consumer and commercial customers alike to feel more comfortable about the inevitability of this world that Cisco calls 'the self-enabled consumer'."
--------------
When you connect on demand
"Everything changes when you can connect on demand," according to Cisco's vice-president for financial services Jim Greene who cites the example of the Nike running shoe that is linked to an Apple iPod music player.
"Nike, one of our clients, has bought into this notion that we have been promoting for years called 'enabling and orchestrating commerce.'
"So, banks don't sell products, they orchestrate commerce. Nike does not sell shoes, it orchestrates commerce," he said, explaining that Nike, a telco and a credit card issuer had come together to manage an interaction.
"They've reckoned that if you put an RFID chip on a running shoe, connect it to my heart monitor, connect it to my iTunes, and connect it to - pick a bank, and I can program that - at 3km into a 5km race, I start to get pretty tired, and my heart rate can show that.
"They can pick that up, they also know, because I've programmed that when I hear Led Zeppelin I get pretty fired up and I can go two more kilometres... But my iPod may not have the Led Zeppelin song that I want, so a message is sent to the cloud to download that song.
"It's paid for by the bank's credit card, I instantly have it and now I'm running again, breathing better.
"The point here is that the connection of intelligence into devices is allowing for a customer experience that draws more relevance and in so doing I bought the $160 pair of Nikes, when a $90 pair would have helped get me from A to B just as well.
"But what those firms were doing was orchestrating relevant commerce as opposed to competing based on the functions and features of a shoe," Green explained.
Prev
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Next
