The challenge of updating legacy environments and transitioning to more agile, innovative technology has been at the forefront of most banks' priorities in recent years. ‘Evolve or become irrelevant' has been the mantra, and with good reason.
Focusing on updating the technology itself is just part of the picture. Yes, banks need to transition to integrated cloud systems, embrace innovations like artificial intelligence and develop engaging digital experiences for their clients - but they also need to remember that moving away from traditional systems is as much of a management and human process as it is a technical one.
The importance of new technologies
It's no secret that as FinTech's continue to emerge as digital-native organisations, strengthening their presence within the financial market space, there's a sense of urgency for banks to update their traditional models and enhance their offerings to compete against the challengers.
In fact, a 2019 survey carried out by Finder - a UK comparison site, found that 12% of British people have switched to digital-only banks, and two thirds plan to in the future. Additionally, 2019 research by Accenture highlighted that UK digital-only banks were on track to triple customers in just 12 months - growing from 13 million to 35 million. These statistics suggest there may be a limited time window in which traditional banks can act, before the market really explodes.
For banks to future-proof their operations they must adapt and implement a digital-first strategy, offering a customer first, secure and personalised banking experience. Digitalising legacy systems and automating processes, through the utilisation of new technologies such as Artificial Intelligence, open API's and cloud-based systems, banks will be more equipped to compete with non-banking financial institutions and stay ahead of the competition.
A time of adaptation
There is a significant opportunity to recreate banks as we are introduced to new ways of financial institutions offering services to their customer. FinTech's for example, offering, flexible, agile, seamless, fast and highly personalised services. To create these new business models, and stay ahead of the time, its important to highlight that technology and organisations go hand in hand; you cannot update one thing without another.
A popular strategy these days is opening satellite banks for both retail and SME offerings. Operating in relative isolation - separated from the incumbent infrastructure. This strategy helps to launch personalised banking in a fast and agile way. However, innovative core banking has just began to emerge and it not yet widely used, meaning supporting existing technology with extensive banking requirements is a stretch.
It's not all down to technology
That being said, updating legacy systems and implementing new technologies is just part of the challenge when developing a financial institution. With new technologies and more integrated approaches to data and applications, new ways of working and managing workflows, responsibilities and projects must be implemented.
Organisations need to adapt and evolve their delivery models, break traditional banking siloes and leadership styles if they are to truly harness the benefits of digital transformation. They must ensure that personnel throughout the entire business - from the most junior members of staff up to the senior leadership team - actually understand the new technology, why it's been implemented and what it's meant to achieve.
When new tools and technologies are introduced, aimed at generating new data insights, it is important that all personnel understand the significance of those insights and what they should do with them. How should they be changing service delivery, customer relationships, or other modes of working? Data on its own has no value unless they inform tangible actions which can then lead to relevant insights.
Implementing new technology and creating a sub organisation is very much an organisational question: Who do you want to be and what do we need in terms of organisational structure and technology to cater for this.
Alternatively, when a particular technology has been implemented in order to automate a process - which was previously manual and time-consuming, businesses should take this opportunity to upskill its workforce into strategic areas, as well as identifying other tasks that may require a final check on automated processes.
In short, technology transformation programmes are about people, organisational aspects and process as much as they are about the technology itself. Meaning a holistic approach is essential for updating any institution.
