INSIGHTS - BLOG

The back-end opportunity

19 May, 2017
Harold Bosse, Global Head of Product and PMO
Harold BosseGlobal Head of Product and PMO

Why does everyone enthuse so much about ‘front-end innovation’ as the secret elixir to success? Unless the back-end is efficient, state-of-the-art and client/partner-friendly, no amount of wizardry in the shop window will make your offering truly successful. A poor back-end will lose you business, as simple as that.

This argument surely adds fuel to the belief that there are countless opportunities for back-end innovation as a differentiator.

To be clear, a strong front-end is also a prerequisite in a competitive market but the front-end, the means to reach-out to your clients and originate business, can only deliver the expected value to your customers if the “plumbing” is in shape and working well.

Too often, the back-end is neglected in favour of the shiny, client-facing window that entices people in. This can have dire consequences and hit at the heart of trust, patience and could even damage a relationship but in any case it will hurt your bottom line.

Not for nothing was transaction banking always considered to be the plumbing of an organisation, although it has moved way beyond that in today’s environment, as banks appreciate the consistent revenue generation of this field of business.

So what does a powerful back-end need in order to support successful or expected value creation?

First and foremost, it has to be resilient because however efficient the system is, problems and errors do happen. It’s important that if incidents occur, the damage is minimised and the remedy is as seamless as possible. Confidence diminishes quite rapidly when there is uncertainty about the status of a transaction in progress.

Even more critical, measures have to be taken to prevent a recurrence. When something does happen the perception of your efficiency among a client or partner has already been impacted – it is too late – but you must make sure this never happens again and you have to make sure of this in a systemic manner. Back-end technology and processes should be geared towards managing your incidents swiftly in a continuous improvement framework.

The system should also be able to scale up and scale down, handling times of high volume, both intra-day as well as inter-day, in addition to low levels of traffic. The system has to be stable and ready to offer top quality client service on a 24-7-365 basis.

Without this stability, the front-end itself cannot be innovative. Amazingly, some companies do not get it right, often charging ahead without ensuring the appropriate infrastructure is in place. Consequently, this means they lose credibility and cause problems for themselves and their clients – the truth is, they get found out. History is littered with horror stories of brilliant front-ends with no back-ends. Conversely, some companies understand the value of investing in the back-end and as a result, they are regarded as reliable, customer-centric and real innovators.

But more importantly, in this times of constant innovation and change why haven’t people truly identified that the back-end is where the next real opportunities lie?

A strong back-end can set you apart from the competition, not only allowing your clients to be satisfied with what you have sold them. More strategically speaking, you are creating the prerequisite to innovate your market proposition. A back-end system that is efficient and effective is an ideal platform for creating new, ground-breaking market value propositions. It is a fantastic lab where you can observe behaviour and test your vision without polluting the data.

A good back-end allows you to service to your customers and they will recognise your commitment; a great back-end allows you to bring new value to the market and wow your customers.

What’s not to like in such a scenario?

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