For nearly three years Sean Cash was the COO of the ANZ Mortgage Group where his responsibilities included governance of IT projects and implementation of business initiatives.
Speaking at this year's Gartner Symposium ITxpo in Sydney, Cash said organizations have to grapple with how to look at IT change, either incremental or transformational.
"We've always built a new system or put a new front end on [an old system]," Cash said. "The big prize is to do this in a transformational manner [and] jump out of the traditional way of doing things. The financial organization that does that will make a huge killing in revenue."
While conceding there are no "sacred cows" when it comes to IT change, Cash said at ANZ "we threw everything out and started again".
"You can't design around weak spots," he said. "We have no limitations [so] let's embrace technology. That becomes a management decision."
The "burning question" of incremental versus transformational change arises from management wanting things "faster and quicker", and the speed to market for new products combined with a "robotic approach" to compliance.
"They want transformational rewards for incremental costs," Cash said, adding barriers to transformation include longer running projects and the requirement for broad-based organizational support.
"Incremental change fails to deliver on real goals that give you the business benefit. People confuse BPM with workflow, and management still see that as the facilitation of manual work effort."
Cash said there is a tendency to think that applying a lot of incremental changes will achieve "big bold leaps".
The requirement for transformational change is no more apparent than within the mortgage industry where gaining approval and having it processed has not changed over the last 15 to 20 years.
What has changed is the proliferation of mortgage providers since the industry was deregulated, and the "centralization" of mortgage processing by third parties and retail sales.
"The mortgage industry is in a state of evolution," Cash said. "The mortgage business that used to be run prior to deregulation saw a lot of end-to-end activity in the branches which was inefficient. As deregulation ran through the industry there was a thrust to centralization and to generate economies of scale and reduce cost."
Holding the mortgage industry back are highly-manual, paper-based processing which involves a lot of rekeying with multiple data entry points.
Add to that diverse sales platforms - the banks all have their own proprietary systems for in-house processing and separate systems for brokers - and there is plenty of room for standardization.
"That creates problems for hand-off, rekeying, and it's very people based so it's very non-standard," Cash said. "The by-product is that mortgage processing is not scalable and to deal with volume you have to have more staff. Margin compression is continuing so you need to develop a proposition to give scale and remove people as a dependency and introduce automation techniques as a means to do that."
"The nirvana is a scalable platform," Cash said. "Organizations are looking at different things to achieve cost reduction like multiple processing centers, offshoring, and collaborative use of information, but by and large industry is looking at it from an incremental perspective. For example, a lot of organizations have been slow to move with electronic document management."
Cash said enabling BPM with SOA is the first step where information can be managed end to end using "the power of technology".
"The ability that organizations like FileNet (owned by IBM) bring with process orchestration really starts to generate opportunities for businesses that run large processing operations for compliance and cost. Automation all of a sudden becomes much more palatable," he said.
"When I started this journey within ANZ organizations weren't adopting SAO to do a lot of the work you have staff for. Ultimately you need customer service offices but you don't need people making decisions when you can codify the basis in which they are executing those activities."
Cash said all of the banks are in the same position because the information is just not held electronically to be able to be presented back to customers.
"The Australian mortgage marketing is probably the most complex in the world," he said. On offshoring, cash said he is a supporter of placing activities in a "least cost environment" if it is deemed those activities have to be performed by a person, but automation is a bigger prize.
"Some activities you will always have to do manually and makes sense to put them in the least cost environment like rural Australia or offshore," he said.