Financial Institution Advantage and the Optimization of Information Processing

Introduction

At its most basic level, a financial institution is composed of four things: a brand, a collection of personnel, some physical assets, and analytic (information) assets. The last category includes things like data, data processing capabilities, statistical models of various kinds, and other analytic and reporting capabilities. This categorical breakdown is simplistic, and not exactly clean. For example, there is an overlap between physical assets and data processing capabilities: Are the computers themselves physical assets or information assets? Overlap also exists between personnel and analytic methods: Does a buy or sell decision stem from an analytic method or from a person who makes buy and sell decisions? In spite of this lack of clarity, using this categorization—even in its most simplistic form—can help to frame the crucial underlying competitive issues facing financial institutions today. These issues can be summarized as follows:

1. If you have a strong brand, great, try to preserve it. If not, try to build one. But how?
2. If you have great personnel, great, try to retain them. If not, try to attract them. But how?
3. Physical assets are highly fungible, depreciate rapidly, and matter little, except insofar as they contribute to brand strength and the ability to attract and retain talent.
4. Information assets, actively and effectively managed, create competitive advantages and improved financial results. This helps to build brand strength and attract top talent. ...