Over the last couple of posts on this blog, I have continued to highlight how the future of banking is digital. As customers around the world transition to a digital first environment, it is imperative that financial institutions of today not only need to look ahead to the future but adopt the right steps and strategies today to become future ready now.

However, one of the challenges which got highlighted by the COVID-19 pandemic are the vulnerabilities legacy banking institutions suffer from, and how quickly they can succumb under pressure, thus earmarking the need for resilience.

Thus in today’s blog post, we will take a deeper look at how banks can choose and leverage the right technology to not only transform them into future ready institutions but do so without wasting irrevocable assets such as time and investments (both human and financial).

Without further ado, let’s get started.

Table of Contents

  1. Core Focus Areas
  2. Agility and Resilience
  3. Profitability and Cost Management
  4. Enhanced Customer Centricity
  5. Directing Technology on Core Focus Areas
  6. In Conclusion
  7. The Reference Shelf

Core Focus Areas

As an institution willing to usher in change, it is important for you to first realize the core areas where you should focus your efforts. A recent study by an internal group at EY points out three.

Agility and Resilience

One of the worse highlights of the COVID-19 pandemic was how we cannot predict all risks which come our way; however, we can structure our organization in a manner such that we can respond with resilience and agility when it happens.

Source : UpLabs

In order to become a future ready banking institution, you need to strategically build greater strength across your enterprise and expand your testing to focus around third-party operations, technologies, scenarios, compliances and regulations, all the while ensuring that you craft new performance metrics.

Your future-ready bank will be different in its operations and structure right from its core, thus making it important for you to develop new performance metrics to actualize and measure the same.

Profitability and Cost Management

Second, to displaying the unpredictability of risks, banks suffered from a decrease in profitability as a result of outdated cost management practices in place.

However, instead of viewing this as a loss, you can transform this into an opportunity by adopting holistic cost reduction strategies across three levers - operational, strategic and structural, thus ensuring that you can experience profitability in the future by strategically aligning your resources for maximum potential.

Enhanced Customer Centricity

Lastly, as I pointed out in a previous article, financial institutions who want to create long term value will need to customize their products and services as per the exact needs of the customer while embarking on initiatives designed to help them navigate the aftermath of the COVID-19 pandemic.

In order to do this, financial institutions not only need to analyze customer information they already have but also traverse the extra mile to understand the exact needs of all customers ranging from retail and wealth to business and corporates.

Not only will a stack of hyper-personalized products and offerings increase your brand relevance, but it will also ensure that you deliver over the long term.

Directing Technology on Core Focus Areas

Now that you are aware of the core focus areas of your digital transformation journey let us take a closer look at how you can lay the groundwork for the same.

Agility and Resilience

In our experience and that of business leaders like EY, in order to embark on your bank’s digital transformation journey, you need to transition from a product and project centric approach to one that will help you deliver customer oriented products powered by intelligent decisions.

Along with this, you need to equip yourself with a proposition-centric approach such that your future ready bank can efficiently meet the demands of consumers.

Financial institutions can leverage technologies such as cloud computing consisting of cloud-native high resilient building blocks such that existing architecture and databases can be efficiently migrated without wasting time and investment.

Additionally, deploying advanced machine learning models which can generate tailored insights and leverage domain specific knowledge in real-time will further help you achieve the agility you are on the lookout for.

Profitability and Cost Management

One of the key foundations of any agile organization is the ability to efficiently manage a flexible cost base while having the ability to continuously invest in innovation. Unfortunately, for most banking institutions, this transition would mean reimagining their entire cost structure, including talent bases.

While there are a host of different technologies available in the marketplace for agile cost management, banks need to intelligently arrive upon a decision such that they can effectively separate the signal from the noise.

Engaging in collaborative conversations where critical questions can be asked and answered will further enable their effort to achieve an agile cost management structure.

Source : Dribble

By leveraging data driven insights, analytics and research, combined with the prowess of existing agile cost management technologies, banks can ensure the efficient discoverability of more profitability channels while maintaining consistency in ongoing operations and its reputation among customers.

Along with this, cost management must also be supported via efficient and scalable back-office operations such that end to end operations of the entire financial institution can be improved.

Enhanced Customer Centricity

The ongoing COVID-19 pandemic has successfully shaken the overall sense of financial wellbeing for customers by highlighting unprecedented economic uncertainty and thereby increasing financial anxiety. As a result of this, customers now demand anytime, anywhere banking as a norm rather than a value added service.

However, for banks, delivering enhanced customer experiences not only involves improved customer conversations but also improving backend operations such that every encounter is smooth and effective. This undoubtedly entails that improving organizational efficiency is a must.

By adopting an enterprise grade cloud based platform, banks can not only harness existing technology investments to harness more data driven insights and understand customer needs and expectations better but also stand a chance to compete with the upcoming contingent of fintechs and challenger banks.

Along with this, banks can harness the building blocks of cloud based platforms to drive value creation, deploy digital propositions, discover untapped revenue streams faster and at scale.

In Conclusion

The banking industry of tomorrow is one that is digital-first. By leveraging the right technology and strategically deploying the same, not only can institutions leverage existing technology investments to reimagine core banking but also set the stage for delivering value over the long term.

Thank you for reading, and I will see you in the next one.

The Reference Shelf

  1. Three focus areas to help banks reframe their future [Link]
  2. Transforming core banking with the right technology [Link]
  3. Beyond digital transformations: Modernizing core technology for the AI bank of the future [Link]
  4. Reimagining banking: From disruption to digital transformation [Link]
  5. Next-gen Technology transformation in Financial Services [Link]