When you imagine a bank in your mind, what do you see? It is most likely the traditional branch of brick and mortar. There is nothing inherently wrong with this image, but it masks the fact that a bank’s core product is digital.
When you apply for a mortgage or open a checking account, you don’t get physical good. Instead, you get a digital product, and the driving force behind that digital product is millions of lines of code and layered processes that enable banks to deliver the products and services customers want.
These legacy codes – many of which were written in the last three decades of the 20e century – can often be awkward, reflecting the business processes and products of their time. Today’s customers seek quick and easy access to modern financial products, so this technological legacy and the monolithic processes that go with it make it difficult for banks to quickly adapt their businesses to the digital transformation underway in the world. banking and other sectors. Banks know they have to overhaul their systems at some point, but the transformation can be expensive and complex, and many banks decide to postpone the change at some point in the future.
By observing the pandemic disrupting consumer behavior and the way consumers interact with banks, we have found that the ability to adapt and quickly drive change and scale is a huge benefit. The banks least affected by the pandemic were those that had a model that enabled them to quickly adapt to customer expectations for digitally-driven on-demand services. This model is anchored in agile cloud-native technology and constantly updated in so-called âCI / CDâ pipelines that allow customers to more easily access their financial products and services, thus allowing banks to be âalways onâ. active âprofitably. manner.
True digital transformation can be costly because it means removing the proven processes that banks have long relied on. Instead of simplifying through digital transformation, banks have essentially pasted new fixes to existing code, and with each update pasted, the code becomes more complex and harder to modify or adapt. Ultimately, that’s what leads a lot to sticking to the old code and associated business processes.
As banks know they can no longer afford to operate on old code, transforming into an agile IT organization is extremely difficult when hampered by internal silos, disconnected channels, and corporate IT systems. ‘legacy operating.
To overcome these barriers, banks must take advantage of API-based micro-service architectures that enable connected technology ecosystems and business partnerships that can help them move beyond existing infrastructure and combine existing systems with options. ready for the future.. Such ecosystem partnerships on common cloud native architectures help modernize critical operational components while advancing a bank’s technology roadmap and improving profitability.
Part of building a more agile bank is understanding and anticipating customer needs. Forward-looking transformation requires cross-channel data analytics, as well as the aforementioned cloud-native technology foundation. This can enable a bank to quickly deliver an improved customer experience that can scale on demand. The right approach can allow the bank to focus on financial products without having to worry about the impact on existing codes or algorithms. This makes the management of operations more agile and efficient, as new resources or infrastructure will not have to be created from scratch.
Once banks break away from the traditional channel-centric approach that often stifles innovation, they will be able to deliver dynamic digital ecosystems that match customer needs for the âalways onâ solution. In a post-pandemic world where fintech companies have shaken customer expectations for their financial products, having an infrastructure ready for the future that can serve complex consumer journeys will determine who wins the war for generations of consumers. financial services of the future.
The question should not be: “How much will it cost us to become a smarter, more agile bank”, but rather: “How much will it cost us not to become one? “
Michel engel is Vice President of Banking Software at Diebold Nixdorf.