4 keys to success in the banking digital transformation

Digital transformation is no longer a choice, but a banking business imperative.

Most banks have known for quite some time that they need to digitize to remain competitive. And most have begun their digital transformations. However, each organization has taken a different path to becoming a truly digital organization, and some are much farther along than others.

Various factors complicate the digital journey: proliferating channels, shifting customer demands and increasing competition from both traditional and non-traditional players. Banks must innovate and speed the right products to market and comply with increasing regulation. At the same time, they must find efficiencies and cut costs wherever possible.

Banks must optimize their digital transformations to ensure they’re focusing their efforts and resources on the projects that will add the most value to their organizations.

Here are the four key areas of focus that will help banks clarify their priorities and top concerns as they move forward with their digital transformation.

1 The Overall Game Plan

Every transformation needs a game plan. Without a detailed plan, it’s difficult for banks to know how to manage and run the digital transformation, to measure success and to identify the projects that will provide real value.

Even within a single bank, the term “digital” can mean one of dozens of different things. Given these varying interpretations, there could be 30 different projects that are classified as digital efforts.

It makes sense for financial firms to create a digital program office that includes governance, objectives and priorities for their digital efforts and plans that drive the projects to successful conclusion. If banks fail to create a roadmap and determine digital priorities, they will wind up throwing cash and resources at dozens of different projects that may or may not provide value to the organization.

2 Infrastructure

The majority of banking institutions face massive infrastructure costs, and it’s essential that they find a way to lower these expenses, both in terms of servers and hardware and how they consume their infrastructure.

Even if they don’t do much else, banks can drive down costs and add value by evolving more and more of their infrastructure to Infrastructure-as-a-Service (IaaS). Moving to IaaS saves on up-front hardware and infrastructure costs by changing from a Capex to an Opex model. It also increases agility and accessibility while simplifying capacity management.

3 Applications

While banks can quickly gain many benefits from evolving their infrastructure to IaaS, they can see more advantages by modernizing and moving their applications into the as-a-service world as well.

However, it would be difficult – if not impossible – for banks to simply modernize all their custom applications. An Application-as-a-Service (aPaas) approach offers environments for development and deployment for application services.

With a consumption model similar to an IaaS approach, aPaaS extends the life of mission-critical applications, moves to consumption-based expense, decreases application TCO and frees up both the IT budget and staff resources for innovation.

csc-applications-graphic

4 Business processes

As banks create a game plan and address their infrastructure and applications, they will likely see that they must address their operations in addition to looking at their IT infrastructure and applications.

If there are operational areas that operate at a fixed cost but do not provide value differentiation, banks can either outsource these standardized business processes or, better yet, move these processes into a consumption-based model, Business Process-as-a-Service (BPaaS).

An outside partner can bring a fresh perspective and sensible approach to transformation. CSC has recently partnered with PricewaterhouseCoopers (PwC) to help financial institutions create a roadmap that will help organizations navigate the digital transformation journey. You can find out more about that partnership here.

RELATED LINKS

The lurking variable in banking transformation

4 paths to better banking systems

Banking is changing: Winners, losers and the new ecosystem

Comments

  1. Simon Pollard says:

    Disappointing. The 4 keys to success? I was hoping for thoughtful insight into real world dilemmas like: How to properly baseline where the bank is at today with digital transformation efforts (given that everyone has at least some in flight efforts); What criteria can filter which projects to prioritize?; What budgeting and funding mechanisms do successful banks use to carve out money for incremental digital programs while being asked to do more with less and when compulsory compliance projects soak up perhaps 20%?; Should we renovate the back end core first, or focus on customer facing channels with a services bus over the legacy?; Will our culture sustain another multi-year transformation effort?; What is the right mix of internal skills and strategic vendor partners?

    Instead, this post calls out banal gems – Have a plan (!), and don’t forget to take a hard look at oh yes your infra, your apps portfolio and your processes.

    Like

Trackbacks

  1. […] 4 keys to success in the banking digital transformation […]

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: