This chapter presents the results of two surveys, one conducted in 1993 covering the whole of the UK retail financial services sector, and one in 1995 covering the UK retail banking sector (Survey IT2 and Survey IT3 in the Appendix). The aim of both surveys was to determine the stage of IT development in the retail financial services sector and whether or not IT is being used to achieve business transformation as defined in Venkatraman’s model (1991). The chapter begins with an overview of the model, then the results of the surveys are analysed within the framework it provides. Typical case studies are included to illustrate the stage of IT development reached by various companies in the sector and the different kind of BPR initiatives being attempted.
Venkatraman’s model identifies five levels or stages of IT-induced business transformation: local exploitation (automation); integration; business process redesign; business network redesign; and business scope redefinition, as described below:
Over the past 20 years computers have been used to automate existing work tasks such as payroll, invoicing etc. In some areas, automation has been successful, for example, in the UK insurance sector, where productivity in terms of premium income per employee has risen dramatically. Over the same period, the complexity of the products has increased and new products, many of which would be impossible to administer manually, have been devised (for example, unit linked assurance). A large part of this increase in productivity can be attributed to the automation of existing processes. In an effort to minimise disruption, complexity and cost, most applications have been ‘local’ resulting in ‘islands of automation’. For example, the finance, marketing and