Are we biased on silo-based financial models? Not entirely, but given the advancements in the financial sector, the legacy-based siloed architecture is not exactly a cake walk for bankers and credit unions during these fast-paced tech times.
Going back a few decades, we find the cause for introducing silo-based model in financial organisations being the creation of a systematic and well-defined work culture. This system helped credit unions function in an organised way as all the teams were aware of their individual as well as team’s goal.
Everything went well until the elephant in the room started enlarging, which was the lack of customer satisfaction. While the architecture of credit unions was fully organised, customers had to face the consequences like delay in loan approval, exhaustive paperwork for insurance, etc.
How did siloed systems become the bad guy?
In siloed systems, customers usually shuffle through multiple divisions for simple tasks like account opening. While doing so, each division that customers face, go through recurring process like enquiries about personal details, etc. This happens because of the asynchronous sections in the credit union system causing lack of real-time knowledge of their customers.
Baby boomers were okay with this protocol of financial organisations but millennials and Gen Zs are quite opposite. They would prefer filling out an online application whilst watching their favourite show on Netflix rather than limping between ‘sections.’ In the current times, customers can easily get agitated with the recurring activities and delay caused due to siloed architecture.
But siloed architecture is supposed to be a good thing, right?
Yes, it is, as it creates well-structured divisions in the organisation. However, problems arise when banks and other financial institutions fail to maintain transparency between those divisions or have ‘silo mentality.’ Investopedia defines silo mentality as “…a reluctance to share information with employees of different divisions in the same company.
The disadvantages of silo mentality are:
1.Restrictive data movement
In the siloed systems, lack of communication between teams restricts data sharing. Employees share details only amongst their respective siloes and not between teams. While it is not an issue for individual siloes, but on an organisational level, it might cost a customer.
As mentioned earlier, each time a customer is re-directed to a different division, it is forced upon customers to share their data repeatedly. What does this imply? – Creation of multiple records for the same customer across teams, resulting in data redundancy and inefficiency.
3.Higher data leakage risk
In legacy-based siloed systems, there is no particular storage system pertaining to data security. Along with this, there is existing data redundancy, which together puts the data into high risk of exposure.
4.Update and maintenance complexity
When an existing customer has an update to share with the financial institution, it becomes difficult for the latter to update, as there is no one-stop access for the data of that customer. This leads to further data complications.
5.Difficulty in embedding enhancements
Including any enhancements in the legacy-based siloed architecture becomes next to impossible. This is because, each siloes use different technology and process, and this inconsistency creates a wall between legacy systems and modern enhancements.
How can banks and financial sectors work without siloes?
We know that siloes still hold importance in credit union management because of the need for structured maintenance. Hence, financial institutions have to find an alternate way to work in siloes whilst not compromising customer experience.
So, how about using an architecture that can optimise working in siloes?
Real-time architecture optimization with MLM
Aspire Systems helped one of the popular credit union in Canada using Temenos’ Member Lifecycle Management (MLM.) This credit union was stuck beneath the siloed legacy web portal and outdated user experience, and here is how we helped the client rise above the hindrance:
- The MLM portal was designed to be the central hub across the organisation to integrate, control, and manipulate data.
- The portal eliminated data redundancy, and all the updates reflected in real-time.
- Additionally, MLM portal consolidated information across all data points. This information was put forward to the end users using a simple yet appealing UI.
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