Digitise, Transform, Accelerate the Bank

1 – Banks are under continued operational optimisation pressure to improve cost income ratios.

Business process optimisation and automation has transformed manufacturing and other industries, whereas financial services has lagged behind the curve. How can a bank resolve the issue of delivering process optimisation with fragmented legacy technology?

It boils down to the ability to scale services through self-service and standard components. At the same time, decoupling legacy architecture and compliance will remove the major restrictions to flexible client servicing. Standardisation of the components and features enables the bank to reduce operational costs and creates the platform for future process automation based on standard software. This may include:

• Enabling the delivery of cross-product functions as services, delivering services based on common features across products in the same way that car manufacturing uses single components to deliver multiple models
• Decoupling the application layer of product functions, compliance functions and generic business services to ensure that compliance and regulation have less impact on product development based on customer needs
• Increasing customer self-service and consumer experience; corporate services lag retail services in this area
• Reducing customisation per client
• Increasing use of economies of scale from technology partners and standard software products over home-grown legacy with differentiation being based on service delivery.

2 – Bank clients are demanding consistent multi-channel delivery of services—‘Any product over any channel’—to improve the customer experience.

Historic product silos from both technical and business management perspectives have led to an architecture that does not lend itself to delivery of feature/function across product lines, let alone optimising them for the customer experience across any channel. To enable products to be utilised based on the customer channel preference is a significant challenge. How are banks delivering against this goal today, and what mechanisms are available to enable a multi-channel experience?

• Client demand is to deliver services at the point of process need; for example, based on the corporate client and their very own individual process.
• ‘Any product over any channel’ will become a pre-requisite for service delivery, although most banks currently treat each channel as a separate silo rather than looking at an integrated channel strategy. A few leading transaction banks are considering placing the customer in control of the interface.
• The focus is shifting from channel to digital experience.

This trend is driving towards a digital experience organisational unit that would overlay on channel services a layer to improve the client digital experience, a pre-cursor to cloud management units. The first step towards achieving this goal is widely accepted to be the deployment of single gateway architecture as a framework for future product and service delivery.

3 – Corporate clients will want to consume banking services in the cloud.

How does a bank respond to corporate client requirements for banking services that align to the corporate’s business processes delivered in the cloud, while maintaining a stable and standardised operational model?

The need continues for banks to increase transaction revenues as interest rate products continue to yield lower returns. Decreasing operational costs, increasing customer self service and satisfaction will always be the outcomes relevant to the business case, but achieved through entirely new mechanisms:

• Cloud services create the market and network opportunity to deliver bank services in the marketplace
• Service-oriented models create the opportunity for low-cost standardised delivery, whilst enabling the customer to tailor use and self-serve.

Overall, cloud and consumable web services also create a number of challenges, similar to the dawn of e-commerce and B2B integration a few years ago. The banks need to think beyond new product development and innovation and make changes towards the digital enterprise.

To conclude, this digital transformation will largely change the way products are developed and the way banks will leverage innovation to differentiate. Equally, new challenges arise with compliance and data risk (“Who owns what where?”), while commercial models need to be adapted (“How are these services charged for and how are the necessary counterparties compensated?”).