Systems of Engagement - Home - AIIA · As Principal Analyst Catherine Graeber outlines in the Forrester Report entitled ^Trends 2013: Five Trends Shaping the Next Generation of North

Systems of Engagement Apple usability, Amazon agility, Fort Knox security

To meet the expectations of

digital consumers, financial

services companies need to

find ways to deliver products

to market in days or weeks,

not months or years.

A white-paper prepared for the

AIIA Financial Services Innovation Group

by [INSERT COMPANY NAME]

[insert date]

A white paper prepared for the

AIIA Financial Services Innovation Group

by Avoka www.avoka.com

25/11/2013

This document was prepared in conjunction with Best Case Scenario and the AIIA

Authored By

Derek Corcoran Avoka

Editorial Contributors

Michael Neary Nextgen Group

Patrick Crooks FusionLabs

The AIIA wishes to thank

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Thought Leadership

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assists clients in

the Information and

Communications

Technology sector on a

wide range of commercial

transactions

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White paper Systems of Engagement


Table of Contents

1. The Problem – Two Worlds Collide ........................................................................................................................... 4

2. The Business View on the Problem ........................................................................................................................... 6

3. Options for Dealing with the Opportunity / Challenge ............................................................................................. 9

4. Systems of Engagement .......................................................................................................................................... 11

5. Recommendations .................................................................................................................................................. 19



1. The Problem – Two Worlds Collide

The banking sector has experienced a number of large changes over the course of its existence. For example, the use

of ATMs grew from 41m transactions in 1978 to 11.2bn transactions in 1998 causing most banks to question their

continued investment in the branch network. Then phone and Internet banking arrived and extended the self-service

capability beyond cash withdrawals. Now, a brave new world is colliding with the banking and broader financial

services sector.

WORLD #1 – Consumer Technology (The Digitisation Megatrend)

In the last 10 years, two events have combined to present another enormous opportunity and challenge to the

banking sector: Broadband internet access and Mobile devices have become pervasive. It’s not just about mobile – it’s

all things digital. Consumers expect to be able to complete almost every task on a digital device – research, shopping,

communication, socialising, entertainment… and banking. This is what Booz & Company have labeled the Digitisation

Megatrend.

(Graeber, 2013)

WORLD #2 – Banking Technology

Many airlines reassure customers that passenger safety is their “number one priority”. Similarly, protecting the money

of banking customers is the number one priority of any bank and subsequently its IT department. A loss of confidence

in the bank’s ability to protect a customer’s money would sound the death knell for any bank (as demonstrated during

the Global Financial Crisis). As one banking executive put it recently “there is a zero tolerance of failure in banking IT”

because the cost of failure can be catastrophic.

As a result, Banking Technology is understandably considered one of the most conservative segments of the

technology industry. Google’s mantra of “fail fast, but fail smart” would seem like a very distant concept to most in

the IT departments of a bank. But the reality is that banking technology must find a way to “fail smart” without

impacting bank confidence, security, profitability, regulatory compliance and all the other things shareholders are

concerned with.

As Principal Analyst Catherine Graeber outlines in the Forrester Report entitled “Trends 2013: Five Trends Shaping the

Next Generation of North American Digital Banking”, the cost of not taking mobile seriously could be devastating:

“All’s changed, changed utterly”

William Butler Yeats, Poet

"With the proliferation of digital devices, consumers are highly connected to their Financial providers. And with

adoption of each new device comes higher expectations of those providers, especially among the younger generations.

Get it wrong and you risk losing their loyalty."

Catherine Graeber, Principal Analyst, Forrester

Five Trends Shaping The Next Generation of North American Banking



“In our Technographics research, we found that roughly one in eight online Canadians say they would

consider switching banks if another firm offered better mobile banking services.” Google recently did a

study on mobile banking that found that two in five mobile users will turn to a competitor’s site if their

bank is not mobile-optimized. And 48% of US mobile users report they feel frustrated and annoyed and

believe “the company doesn’t care about my business” when a site doesn’t work well on a mobile

phone.”

Right now, these two worlds of Consumer Technology and Banking Technology are colliding. Customers expect a

digital (PC and mobile) interface to the bank – not just for paying bills or checking balances, but for opening accounts,

applying for loans, disputing transactions, adding beneficiaries to life insurance. Basically, for EVERYTHING. Ultimately,

the bank wants to deliver on this expectation. But IT is struggling to deliver as quickly as the bank and its customer

would like because the tools and technologies they have are not yet designed for this purpose.

In the face of continuous change in banking, one thing has remained constant – customers expect a better deal and a

better experience. Customers want the beautiful experiences they are used to from Apple® products. They want the

ease of doing business with Amazon®, such as 1-Click® and they want the security of legendary Fort Knox. The bank

would love to deliver on all three of these expectations. But it’s not easy.

And so they collide – with a BANG!



2. The Business View on the Problem

Whilst consumers and IT departments grapple to work together, the world keeps turning and the bank has a business

to run in a challenging environment. And that is an environment where trust, differentiation, competition and

technology have changed significantly as influencing factors for the business.

TRUST: Coming off the back of the Global Financial Crisis, trust in banks (and every large corporation) hit a significant

low. As data from Young and Rubicam division BrandAsset Valuator (the largest consumer research database in the

world) demonstrated when survey results showed a decline of trust in the finance industry between 2005 and 2010

(pre/post GFC) where it went from -5 to -58. (Gerzema, 2011)

DIFFERENTIATION: The Financial Services Industry is dealing with commoditised products and extremely low interest

rates and subsequently looking to continuous innovation in service delivery and the customer experience as

mechanisms to achieve sustainable competitive advantage.

COMPETITION: Most banks and insurers have been around for decades and carry significant baggage built up over

those years including legacy systems and processes. From this, a new breed of competitors “born digital” have

emerged and they are cherry-picking the areas where they choose to compete with the traditional banks. Companies

like www.moven.com and www.simple.com and www.mint.com are delivering on the expectation of modern digital

consumers when it comes to retail banking, without the legacy. Some traditional banks are responding in kind such as

National Australia Bank with the establishment of UBank which carried none of NAB’s legacy in to its launch.

“Change before you have to.”

Jack Welch, Former CEO General Electric



At the same time, innovative executives within the banking community have one eye firmly on a new breed of

competitor coming in the form of digital mega-providers such as Amazon, Google®, Apple, and Microsoft®. In

Accenture interviews with executives from 78 insurance companies globally, 64% expected to see competition come

from non-insurance players such as Google and Amazon. (Koco, 2013)

TECHNOLOGY: According to global consulting firm Booz & Company, the forces driving businesses to ensure

technology is at the heart of their strategy are:

1. Consumer Pull – A demand / expectation from customers that everything can be done online;

2. Technology Push – Continuous innovation in the technology sector (cloud, mobile, ‘the internet of things’,

etc.) is driving connected devices in to every aspect of daily life;

3. Economic Benefits – Technology is a growth sector. Technology drives productivity through operational

efficiency and faster time to market. Technology can deliver significant economic benefits inside and outside

the bank.

In a report entitled The Next Wave of Digitization (Friedrich, Le Merle, Peterson, & Koster, 2011), Booz & Company

highlight the fact that whilst the impact of digitisation on customer-facing and operational aspects of the Financial

Services Industry will be HIGH, the speed of this impact will be MEDIUM. Not due to desire, but to barriers to entry

such as legacy technology (See chart below).

And in the same report, Booz & Company look at the factors influencing the speed of digitisation and categorises

them in to accelerators and decelerators as shown in the graphic below. This chart highlights that in the area of



Technology, ‘Complexity’ and ‘Closed Proprietary Systems’ are significant inhibitors to the speed of digitisation of

industries such as banking. But these decelerators, as discussed previously, are colliding with the significant forces of a

range of accelerators such as technology innovation, broadband access, and overall adoption.



3. Options for Dealing with the Opportunity / Challenge

So in the face of the digitisation megatrend, and working with (possibly legacy) banking systems and change processes

that are slow and conservative – what’s a bank to do?

OPTION 1 – Core System Replacement Replacing core banking systems certainly establishes a foundation on which the bank can build innovative products

and services. However, this comes with its own challenges including:

Time – If the experiences of the major banks in Australia are an indication of the time to replace a core

banking system, it is five to eight years.

Cost – Core System Replacement requires deep pockets and a strong resolve. In an interview with Forbes,

Mark Gunning from core banking system provider Temenos suggests “projects with four- to eight-year

payback will always be at the bottom of the pile. That is the major problem — replacing the core is such a

major activity, and you have to be pretty courageous to do it.”

Agility – Whilst a new core banking system may open up new product/service possibilities, these systems are

still large and slow to move. And even after they’ve been deployed, the bank typically experiences quarterly

release cycles for new features and functionality – hardly agile.

OPTION 2 – Let Someone Else Do It for You

To again cite the work of Catherine Gerber from Forrester: “With slim internal development resources and a history of

long delivery times, banks can’t react to market changes quickly enough. But all this can change with open platforms,

as Crédit Agricole, the largest retail banking group in France, found. The bank opened up its platform to external

developers. Those developers created 19 new apps in six months, compared with the two years it took the bank to

create its own mobile banking app.”

The Bancorp Bank is the FDIC insured institution behind www.simple.com and whilst Simple is a separate entity, it

could also be viewed as the modern digital customer experience for Bancorp Bank.

UBank is the branchless, modern, online, social media focused entity of NAB. Backed by the financial strength of NAB,

UBank carried none of the legacy of NAB systems into its establishment, instead choosing new platforms and

approaches to engaging customers.

And then there are organisations like www.mint.com or, more locally in Australia PocketBook

(https://getpocketbook.com) who provide the customer experience that consumers want but banks are struggling to

deliver (as well as aggregation services to deliver a single view across multiple accounts and institutions). These

services could be viewed as security risks – but they highlight the desire for this type of convenience amongst

customers.

These organisations can remove the bank from the customer experience, turning the bank in to a factory that

manufactures products to be sold through shiny (digital) retail shop fronts. The fear of being disintermediated in this

way is motivating the banks to ensure they are meeting the growing demands of digital customers.

“To improve is to change; to be perfect is to change often.”

Winston Churchill



OPTION 3 – Deliver Digital Services from Inside-Out

Banks can look at their existing systems and determine how to create modern layers on top of and integrated to those

systems. Basically start with what they already have and build from the inside-out. This is understandably a popular

choice as it does not involve the time or cost associated with core system replacements (banking, lending, wealth,

CRM, etc.), but rather builds on the existing investment made in those platforms.

However, this is still a costly and time intensive activity, often requiring core systems to be ‘service enabled’ to allow

their functionality to be accessed from a public facing digital channel. Further to that, careful and appropriate

consideration must be given to the security implications that would occur in the exposure of these systems when

accessed by the digital channel.

The tools available to the IT department to deliver these integrated customer experience layers are typically complex

requiring specialist software development skills. So whilst this approach allows the bank to deliver the desired

customer experience, the time-to-market for a solution like this is significant and inhibits the businesses ability to be

agile.

US direct banking giant PNC took this approach with the development of their Virtual Wallet solution. A $15m investment quickly delivered 150,000 users (representing a 14% increase in the Gen Y segment of PNC’s customer base). PNC have forecast a 2 year return on the investment made to develop Virtual Wallet. This is 1 year less than the equivalent ROI for a new branch. (Hyde, Jain, Girolami, & Landau, 2010)

OPTION 4 – Adopt a ‘Systems of Engagement / Systems of Record’ approach to IT Architecture

A new alternative approach that is gaining significant traction in the IT and business community is the separation of an

organisation’s systems into two categories:

1. Systems of Record which are the authoritative data source for a given piece of data or information. They focus

on the organisation’s internal business processes. These are the CRM, ERP, Core Banking, Finance, Human

Capital Management, Product Lifecycle Management, etc. type systems within an organisation.

2. Systems of Engagement focus on customer interactions. Designed from the outside-in to deliver the customer

experience that customers expect rather than impose on the structure of the organisation’s business

processes and databases on those customers.

Systems of Engagement (SoE) provide the organisation with the ability to deliver the digital experiences the modern

customer expects.



4. Systems of Engagement

Definition of Systems of Engagement

There are several definitions of Systems of Engagement. As outlined above, SoE are focused on customer interactions,

not internal business processes. Forrester define Systems of Engagement as follows:

Distinct from systems of record, systems of engagement (SoEs) are an emerging set of software

infrastructure and mobile device technologies that enable companies to blend contextual data with

digital intelligence to empower users with the most likely actions in their moment of need. The

software can combine the user’s context from devices and smart products with company insights

about their customer or partner status, social media context, and business analytics to offer

appropriate actions. Systems of engagement create powerful new work processes, partner

collaboration, and customer engagement that increase productivity and profitability.

An organisation may believe it has delivered Systems of Engagement by simply building engaging customer

experiences on top of existing systems. However, when you consider the attributes of Systems of Record (SoR) and

Systems of Engagement in the following categories it becomes quickly apparent that SoE have some unique attributes

that are distinct from anything that can be delivered as custom developed software:

“The best customer service is if the customer doesn't need to call you, doesn't need to talk to you. It just works.”

Jeff Bezos, Founder & CEO Amazon.com



Background to the Systems of Engagement Concept

The concept of Systems of Engagement is attributed to Geoffrey Moore, a respected and successful business author responsible for titles such as ‘Crossing The Chasm’. Recently, Systems of Engagement has been adopted by organisations such as Forrester, IBM and AIIM. In his paper for AIIM.org entitled “Systems of Engagement and the Future of Enterprise IT” (probably the earliest published piece on the concept) Moore states:

“amidst the texting and Twittering and Facebooking of a generation of digital natives, the fundamentals of

next-generation communication and collaboration are being worked out. For them, it is clear, there is no going

back. So at minimum, if you expect these folks to be your customers, your employees, and your citizens (and,

frankly, where else could you look?), then you need to apply THEIR expectations to the next generation of

enterprise IT systems.”

Systems of Engagement … will overlay and complement our deep investments in systems of record.” (Moore,

2011)

This sets the foundation for what Systems of Engagement mean for enterprise IT – it is a way of connecting the

ubiquitous digital devices of the modern consumer with the enterprise systems of record that run the organisation on

the inside. It is an outside–in or customer–first approach to the next generation of technology systems.

Moore proposes an architecture model to support Systems of Engagement that breaks away from the bottom up

hierarchical model that has Systems of Record at the bottom, integration layers above them and user interface layers

on top of that. Instead he proposes a customer-centric model that:

Begins with the customer at the centre with a focus on and control over their identity, content, and device(s);

Radiates out to a second layer controlled by the CIO that dictates how the customer is allowed to engage with

the bank;

Then a third layer of applications designed to process information in accordance with the bank’s business

processes.



Human-centric architecture model for Systems of Engagement



Some examples of Systems of Engagement that you are already familiar with include:

System What makes it a System of Engagement?

Web Content Management Once upon a time, the art of HTML for Web page creation was the sole domain of specialists in the IT team. But as the importance of the website increased, the business (marketing, sales, product owners, customer service) needed to take control of the content. Now, content editing for Web pages is akin to work processing or laying out a Microsoft PowerPoint® slide. Similarly, the functionality to publish that page is intuitive and easily configured. IT are still the custodians of the Web Content Management system and ensure that system is reliable, scalable, secure – but the business owns the content and can publish it in minutes in response to events, customer expectations, or changing market conditions.

eCommerce The products available through a retail site, their pricing and associated availability are all stored in a relational database – but who’d know? Certainly not the team responsible for keeping the product catalogue up to date and available through the organisation’s eCommerce site. In fact, the eCommerce site may actually be eBay® or Amazon. The business is again in control of these systems and what customers can do on those sites. Again – IT keeps these systems running and is entirely responsible for new features such as 3D pictures of products and the ability to interact / rotate those images. But day-to-day, the business is self-sufficient in leveraging the eCommerce platform to engage customers.

Digital Marketing Suites Ever noticed how you can search for a home loan in a search engine, then you go to your favourite news site and find there’s an advertisement for some bank’s home loan product. And if you hit that bank’s website, the home page is tailored to present information about home loans? That’s what a digital marketing suite with analytics and personalisation capabilities can deliver. And it is the domain of the modern marketer, not IT. Digital Marketing also extends to Social Media engagement

Cloud The Cloud offers the ability for solutions to be rapidly prototyped and then released in production, with the ability to handle scale. This can be contrasted with previous “on premise/data centre” environments where a prototype could be built, tested, and ready for release – but a three to six month timeframe for the establishment of new infrastructure (to make the prototype available to customers with the ability to scale) would erode the time-to-market.

Application to Financial Services

In the context of the financial services industry, Systems of Engagement have a significant role to play in effectively

engaging the modern digital customer.



Most customers have a long and complex relationship with their main financial institution (The average Australian has

more than 2 products with their main bank) meaning there are multiple transactions over the life of a banking

relationship. But if we focus on customer acquisition, the modern process may be represented by the diagram below:

Something happens to put the customer in the

market for a product like a loan. It may be getting

married, leaving school, a TV ad, or a friend’s recommendation.

Customers use tools such as Google, Bing®, product comparison websites and social media to find the

best product / service for them, trusting their own

research over advertising.

Once the right product or service is identified, the customer engages that

organisation to Open an account or Apply for a loan

or other product.

Upon successful processing of the

application, a relationship is established that must be

serviced with a view to retaining and growing

share of wallet.

SYSTEMS OF ENGAGEMENT SYSTEMS OF

RECORD

The technology used in the stimulus, research and transact phases of the customer journey above are the Systems of

Engagement and once the relationship is established with the customer, the Systems of Record kick in to manage and

expand that relationship.

The following table lists examples of what a SoE approach might bring to a transaction such as applying for a loan.

Theme Attributes Examples Related to a Home Loan Product

FOCUS Customer Interactions Applying for a home loan should be optimized for mobile or desktop devices allowing customers to switch between those devices and complete the application in multiple sittings.

GOVERNANCE Collaboration The product owner for the home loan should be able to work with customers to design an intuitive and convenient application process that may allow the customer to leverage information such as taking photos of ID to streamline the application process.

CORE ELEMENTS Insights, Ideas, Nuances The application process should provide feedback to the home loan product owner regarding abandonment and time to apply to allow the customer experience to be improved over time. The application process should also allow the customer to provide



qualitative feedback during and after the application – for example, through social media links on the confirmation landing page or live chat.

VALUE Open Forum for Discovery & Dialogue

The application process should openly engage customers in a dialogue with the bank and other customers regarding their expectations and experiences of the process to identify ways to improve it.

EXPECTATION Immediacy and Accessibility

When a customer finds the loan they want, they do not want to make an appointment to speak with someone or visit a branch, they want to apply (or at least begin) right now.

PACE OF CHANGE Days / Weeks As new loans are released with new features such as a special offer – the bank needs to get this product to market within days to ensure any first mover advantage can be capitalised on.

Sure, Amazon.com® isn’t a bank (yet!) – but they still deal with a significant volume of financial

transactions ($61.bn worth of them annually, and growing). But you may have noticed that

whilst the Amazon purchasing experience has evolved rapidly over the years (e.g. Amazon

Windowshop app on iPad®) the Amazon payment experience, which needs to be managed very

carefully, hasn’t changed much at all. Payment processing is a System of Record for Amazon. The

purchasing experience is a System of Engagement.

Examples

There are a number of interesting SoE examples in the financial services industry already, both locally in Australia and

globally.

Auckland Savings Bank – Facebook Virtual Branch Branches serve a number of purposes for a bank – the most common being transactions and advice. With more and more transactions migrating to ATMs, Smart ATMs, and the online channel – advice is becoming an increasingly important part of the branch’s reason for being. ASB established a virtual branch on Facebook® with real live tellers and indicators of teller availability. This allows a customer to “enter” the branch, choose a teller and begin a private conversation about their existing accounts or new potential products. With over 1bn people on Facebook – it’s a pretty cost-effective way of delivering on the intimacy of a branch relationship without the cost of expensive retail real estate.



mint.com Mint is not a bank. It is a user interface for a customer’s various banks. Mint aggregates information from a customer’s various banking relationships from different source banks (the customer has to share these details with Mint – the security of which has been questioned). All this information is presented in a single view through a mobile/tablet app and website at mint.com. This provides Mint with the flexibility to deliver exactly the user interface layer that customer’s want instead of being limited by a particular Internet banking layer – making Mint a System of Engagement. The aggregation also gives the customer a convenient single view of their banking relationships – transaction accounts, savings, loans, retirement plans, etc. And Mint is free. They make their money by providing customers with recommendations regarding new accounts that could be opened and obtaining a referral fee from the bank if that account is opened. Because Mint can see all those various accounts, the platform could recommend moving money from a transaction account to a term deposit and recommend the best term deposit account available.

ICICI Bank releases Facebook banking app India’s ICICI Bank launched a Facebook app called Pockets that currently provides these functions:

1. Split & Share – which, as the name suggests, allows a group of friends to split a bill.

2. Pay a Friend – which allows for the transfer of funds between two Facebook friends.

3. Book a Movie – You can book movie tickets for a group.

4. Recharge – add funds to your prepaid mobile instantly.

This app obviously paves the way for more “social banking” and mobile banking capabilities.



St. George Business Connect Having a specialist business banker in every branch can be expensive and they may be under utilised. But having them float across a number of branches may mean the banker is in the wrong location at the time when a customer wants to talk to them. St. George Bank is utilising video conferencing facilities to leverage their team of specialised business bankers and make it easier for business owners to have a one-on-one conversation with a business banker at a time that’s convenient for them – when they walk in to a branch.

Web Content Management Systems Every website hosted on a Web content management system is an example of a System of Engagement. Modern content management systems provide the business with the tools to:

Rapidly create and publish content without IT involvement;

Deliver rich content such as live chat, video and dynamic pages;

Utilise analytics, targeting, and personalisation to maximize the value of the time spent by a customer on the website.

Websites have gone from being reasonably static brochures for a bank’s products and services to interactive mediums for personalised communication between the bank and its customers. These sites change daily or hourly…not in schedules measured in months, quarters, or years, as is the case with many Systems of Record.

The next phase in the evolution of Systems of Record will be to leverage this agility and customer engagement in areas

where customers transact more with the bank, such as account opening, loan applications, and account maintenance.

Soon, banks will be able to acquire new customers through online and mobile channels just days after a product has

been approved for launch - not months, quarters or years.



5. Recommendations

Look from the outside > in

It is very easy to design customer experiences based on the capabilities or limitations of your existing systems. For

example, your core banking system may require an online account opening process that captures all the mandatory

information in a single form, thereby not supporting the idea of save and resume. If you begin with this limitation, you

may end up with a customer experience online and on mobile that persists this limitation.

If, however, you were to analyse the desired customer experience for opening an account, you would quickly come to

the conclusion that save and resume was an important feature. In fact, save on device A (e.g., smartphone) and

resume on device / channel B (e.g., tablet or branch) could also be important. Begin with this process and determine

the best way of mapping this desired customer experience to your core banking systems.

Look at customer-driven and technology-driven nnovation

To effectively leverage the world of Systems of Engagement, we recommend you jointly review:

1. The ‘moments of truth’ in the interactions between your customers and your organisation – as this will

identify the areas where you can change the customer experience – customer-driven innovation;

2. The various technologies available because, if you don’t know what’s possible, you may never think to

investigate opportunities for improvement in a particular area – technology-driven innovation.

For example, returning to our home loan scenario, your moments of truth, technology capabilities and associated

mapping might look something like this:

“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”

Warren Buffett



Look at the Customer Experience capabilities of your peers globally

Obviously, you are already monitoring the capabilities of your competitors. But there are organisations that can help

provide a summary of leaders at a local and global level including:

Forrester Research (e.g., Forrester’s Customer Index Blog

http://blogs.forrester.com/category/customer_experience_index);

Temkin Group @ www.temkingroup.com specialise in customer experience across a range of industries.

Looking at other sectors such as retail and hospitality may provide interesting insights;

NetBanker.com @ http://www.netbanker.com/ and the affiliated Finovate conference are a great source of

inspiration and insight in to what leading FSIs are doing;

Banking Technology @ http://www.bankingtech.com/. The annual Banking Technology Awards highlight case

studies in the banking industry – these case studies are led by Banks and other FSIs, not vendors.

Who should be responsible for Systems of Engagement in your organization?

One of the core value propositions of SoE is to break away from the speed at which traditional IT projects are

delivered. So, where should ownership of those systems reside within your organizational chart?

CIO Systems of Engagement are, after all, IT systems. So responsibility can sit with the CIO function provided a different governance model exists for managing these systems. Although, it may make more sense for IT to be the custodians of these systems ensuring the required levels of security, scalability, and reliability are delivered.

COO With the digital channel being just another channel like branches and call centres, perhaps ownership of this channel should be part of the overall operations of the business. This can definitely work provided the right skills are brought in to operations. There is a level of technical skills required to effectively operate Systems of Engagement that product and process professionals often do not have.

CMO/Distribution Often the role of Systems of Engagement is in the sale of products and services to customers. Therefore it may sit as part of the marketing/sales arm of the business. This can make a lot of sense as marketing has the skills and experience of controlling the organisation’s website which is a perfect example of a System of Engagement.

CDO Or, to achieve a real change, it may make sense to establish a new division under a Chief Digital Officer specifically tasked with engaging digital customers. This approach has the obvious downfall of being disruptive to the business model – but the advantage of minimising the amount of legacy technology and process brought in to this brave new world from the existing business. For example, Telstra established Telstra Digital and NAB established UBank.



Traditional governance models will strangle your investment

If you choose to invest in Systems of Engagement and then apply traditional risk-adverse governance models of

enterprise IT, you will stifle the innovation you may have just acquired through the purchase of software licenses.

Introducing Agile as a methodology will only go part of the way towards ensuring the agility of these platforms delivers

value. You must also find a way, without compromising security, etc., to release the potential in these systems

through a new governance model that operates at a different pace to your traditional IT project office.

Consider the option to ‘not integrate’

The financial services industry has been capitalising on the opportunity presented by Internet banking and the broader

online channel for about 15 years. Still, there are varying levels of maturity in the online offerings of various banks. But

no full-service bank (offering personal and business banking along with wealth management products) has managed

to migrate every transaction to the online channel. Now throw mobile in to the mix. The existing online experiences

need to be migrated to mobile, and the remaining paper / call centre / branch transactions still need to move online

and mobile.

When thinking of Systems of Engagement in the context of how you deliver a better customer experience – it is useful

to consider whether the solution you’re designing needs to be integrated or not. Just because you can

integrate…doesn’t mean you have to.

For example, if your mobile banking app provided the ability to pay a bill and this wasn’t integrated and required

manual processing of the bill payment 24 or 48 hours later – you could have a situation where a customer pays a bill

on the due date and has their power or phone disconnected. Not a good idea. So integrate!

Alternatively, if you provided a customer with the ability to request an additional credit card on an existing account –

they have no expectation that the card will materialise immediately. So taking a day or so to process this request may

be OK. A solution that is integrated and immediate would obviously be ideal – but that can come at a significant cost

and may destroy the business case for delivering the customer experience component of this transaction online.

Many people view online and offline experiences as black and white…if you’re online, then it’s integrated. But the reality is that there is a continuum – on the one end there’s straight paper, then an online experience with no integration, then an online experience that is integrated for data validation, and finally straight-through processing. For many transactions (not all) there is a ‘grade curve’ or ‘law of diminishing returns’ when it comes to the customer value created when you move from an online experience to straight-through processing.



Example – the interest rates advertised on a banks website are not drawn from a database table in the core banking

system – even though they absolutely need to live there for interest calculation purposes. But creating that type of

coupling between the website’s content and the core banking system as a single source of truth just doesn’t make

sense. The restrictions that type of integration would place on the bank being able to advertise new products / rates

and create Web pages would be overly restrictive and not deliver a return on investment.



Works Cited Friedrich, R., Le Merle, M., Peterson, M., & Koster, A. (2011). The Next Wave of Digitization. Booz &

Company Inc.

Gerzema, J. (2011). Spend Shift. Adobe Summit. Salt Lake City: BrandAsset Consulting.

Graeber, C. (2013). Trends 2013: Five Trends Shaping The Next Generation Of North American Digital

Banking. Forrester Research Inc.

Hyde, P., Jain, A., Girolami, S., & Landau, B. (2010). Capturing Growth in U.S. Retail Banking - Building a

Sustainable Right to Win. Booz & Company Inc.

Koco, L. (2013, October 14). Google, Amazon Might Plat Big Footprints in Insurance Distribution.

Retrieved from www.InsuranceNewsNet.com.

Moore, G. (2011). Systems of Engagement and the Future of Enterprise IT: A Sea Change in Enterprise IT

- See more at: http://www.aiim.org/futurehistory#sthash.Jkx1uXz9.dpuf. AIIM.org.



About AIIA AIIA Overview The Australian Information Industry Association (AIIA) is the nation’s peak industry body for the technology sector. AIIA sets the strategic direction of the industry, influences public policy and provides members with productivity tools, advisory services and market intelligence to accelerate their business growth. AIIA member companies employ 100,000 Australians, generate combined annual revenues of more than $40 billion and export more than $2 billion in goods and services each year. With member companies right across the country, from every sector of the industry and representing every size of company, AIIA is truly the ICT industry’s association of choice.

About AIIA’s Financial Services Network AIIA established the Financial Services Business Network for executives interested in technology-led innovation in the financial services industry. Join us to:

• Understand the innovation opportunities in financial services

• Facilitate networking between the innovators in financial services and the suppliers of technology solutions

• Discuss and create technology-led business opportunities in financial services and facilitate deal making.

In partnership with specialist companies from across the ICT industry, AIIA releases regular Thought Leadership pieces in the financial services arena.

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Systems of Engagement - Home - AIIA · As Principal Analyst Catherine Graeber outlines in the Forrester Report entitled ^Trends 2013: Five Trends Shaping the Next Generation of North