Modernising banking infrastructure can be a daunting and expensive process. Even though many banks want to digitally transform, only 30 percent of those report that they have successfully implemented their digital strategy. 

Mind the traps

It is true that many digital transformation endeavours fail no matter what industry because these businesses face some common obstacles. These include an underestimation of the cost and complexity of transformation, especially if this exceeds their initial budgets and timeline. However, some banks have not even set out a dedicated budget for their transformation process, but approximately one fifth of their IT budget is spent on digitalisation.

As many financial service enterprises have continually invested in their operations over the years, they have built up a significant amount of unused technology. Throughout the banking industry, siloed operations are rampant, which adds to the complexity of transforming operations due to the disconnect of backend systems.

The step-by-step approach 

All digital strategies begin with understanding the business case which is driving this transformation effort. In the first instance, financial services institutions must ask themselves some initial questions, and only from there they can truly understand the need for this transformation push. These questions can include:

• Does our current technology work for our business and our customers? 
• Are there any gaps in our technology and can they be bridged?
• How has banking technology changed and have we kept pace with modernisation?
• Do we have a future resilient business? How easily can we adapt and change?

In order to ensure that the technology modernisation process is a successful one, banks should audit their current operations and find the gaps in their technology, where service standards and efficiency goals are not being met. This includes looking at both their backend systems and front-end channels and how they connect and interact with each other. From there, banks need to set out their transformation goals and create strategic plans to meet those needs. 

Banks must also look at the culture within their operations as sometimes a successful technology modernisation programme means changing the thinking and the structural set-up and culture within an organisation. No matter the skill of the individual employees within the bank, if there is a breakdown of communication process and patterns internally due to structure and business process design, it will impact how successful the bank is. 

To overcome this, financial service institutions must create a consistent way of working, which focuses on internal collaboration, technology, data, and customers, and deliver on operational excellence. It is important for all within the organisation to unify their business processes and behaviours to get rid of silos in both their technology and their cultural mindset. In addition, employees on the front line must be able to clearly articulate their core values and goals of the financial service institution to their customers.

Create a future looking business

As banking technology continues to develop, financial services institutions must move with the times. There is a real opportunity to create an autonomous enterprise with existing technology. This is a business that comprehensively applies artificial intelligence (AI) and automation across the business, to create an enterprise that is agile and self-optimising. To really futureproof and ensure ease of adaptability and resilience, effective utilisation of these solutions is a must. 

All financial services institutions have to deal with the pressure of changing market volumes, conditions and customer expectations shifts. As an autonomous enterprise they are able to adapt the automation levels to meet business and customer needs. At the point in which this process becomes automatic – but with the knowledge that a human is still needed in the loop to oversee operations and manage the most complex cases – this is where banks can create a truly resilient autonomous enterprise.

A technology modernisation journey for banks requires a thoughtful approach at the right time and in the right context. Banks should not transform their operations because their peers are doing so, they must look inward and understand their individual needs and unique customer demands.