Among the many critical success factors driving change across the financial sector, some obvious ones stand firmly at the top of the 'to-do' list. Deloitte's 2018 Banking Industry Outlook observes: “For banks globally, 2018 could be a pivotal year in accelerating transformation into more strategically focussed, technologically modern, and operationally agile institutions, so that they may remain dominant in a rapidly evolving ecosystem.”
Dealing with regulations, cyber threats and customer centricity are very much the compelling issues of the day within the context of this essential transformation. These challenges are concurrent, making for a crammed schedule of priorities. The robustness and growth of the business is hugely dependent on the capabilities of a bank's technology to address the challenges, and drive the competitive advantage.
- Regulation has brought a fresh focus to data
An increasingly stringent regulatory environment is dictating detailed system assessment to ensure that banks can completely embrace the two key strategies essential for efficient and safe data management. Both are about understanding, where and what the data is, and what you can use it for.
The first strategy is to gain (rapidly) a very detailed understanding of the data a bank holds, how and where it is held, what permissions pertain to it, and what actions are required to drive organisation-wide best practice in data governance. The closely associated second strategy is to find ways of exploiting the data to understand customers better.
- A threatened cyber world
Cyber security is at the top of the agenda across the entire IT estate and globally-dispersed corporate structures. The more customer-centric an organisation becomes - and it must - the more exposed it becomes to the risks posed by cyber security.
- Digital is personal
Customer expectations have been reshaped through great retail experiences from organisations such as Amazon and Apple. Now, customers see no reason to accept anything other than the same level of service excellence and innovation from their bank.
Getting the house in order
As well as external challenges, three key internal factors require action. The first is the legacy system issue. Banks often struggle to deliver compatibility with newer, faster approaches to IT that move beyond legacy capabilities.
The second internal factor is looking at the structure and culture of the organisation. At the most senior stakeholder grade within banks, high-level experts run the risk of creating a culture of siloes. These individuals are frequently not accustomed to working across the organisation with teams from multiple disciplines, or even across locations in a geo-dispersed financial institution. Despite their value to the business, many can be referred to as 'old school'. This is not a place where continuity of processes, panoramic vision, or maximum operational efficiency flourish.
The same characteristics apply to the third internal factor; historic processes. These are processes that do not always align with the way customers now expect to get things done with their financial services providers. FinTechs strip out layers of complexity to offer speed of interactions and transactions (consider mobile or app-only providers such as Monzo for example).
Looking at how banks can survive in a disrupted marketplace, KPMG has observed: “The fundamental definition of how customers experience and interact with a bank is being challenged and redefined. The financial services industry is facing a new and complex environment. Customers now want different ways of handling their money.” Among traditional banks one still tends to find outdated procedures that can aggravate customers.
Customers are getting smarter through technology. They know there’s a better way. Banks have to respond. EY's 'Banking Outlook 2018: Pivoting toward an innovation-led strategy', says: “Consumers are drawn to FinTech services because propositions are simpler, more convenient, more transparent and more readily personalised.”
The recipe for success
The optimum start point is to bring cultural values in line with customer expectations in a digital world. Customer centricity drives the need for both cultural and technological change. At the same time banks should assess the value and function of their legacy systems as a foundation for finding ways to transition in high-profile, business critical parts of the IT infrastructure.
Seamless orchestration and connectivity across the enterprise is essential for a bank to be able to contend with external pressures (and, indeed, opportunities) on many fronts while eliminating the inefficiencies that don’t so much come from legacy IT as from legacy thinking.
For banks to transform customer service management, SaaS models can help. They provide attractive lower costs of entry than can be entailed with a complete system overhaul. They are also easy to deploy, enabling a bank to manifest relevance to customers while it attends to the bigger issue of digital transformation.
Cloud solutions simplify and automate processes to transform the customer experience and increase customer satisfaction. While they are a big step in the right direction, the complete journey is of far deeper implication across the organisation and across its IT. Every journey, starts with the first step however. Incremental moves forward are better than no movement at all.