A New Approach to Digital Transformation Using Disruptive Technologies

Kanika Hope
Kanika Hope – Chief Strategy Officer

Transformation Challenges

The widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry: the digital-driven disintermediation of the banking value chain.  The COVID-19 pandemic has rapidly changed consumer mindsets and circumstances driving banks to both accelerate and scale digital transformation and customer experience across complex product and customer journeys.  Many incumbent banks are not equipped for this change because of the limitations of their complex legacy-based IT systems. Although banks have been investing heavily in digital and cloud technologies in recent years, they have been reluctant to embark on core system modernization.  

Historically, banks’ technology transformations involved high execution risks, costs, complexity. These multi-year programmes were structured around few and infrequent milestones, had long payback times, high initial investment, and late-accruing benefits, making the business case hard to justify. Furthermore, changing business requirements during the project led to scope creep, delays, and overrunning costs. This is because available packaged software and technology forced banks to follow traditional implementation strategies with complex, interdependent work-streams involving co-existence and integration of new and old systems, duplication of effort and throwaway code.

The Role of Disruptive Technologies

Today, the maturity of software packages in harnessing the disruptive technologies upends these traditional implementation approaches. Distributed cloud-native architectures leveraging containers, microservices, and open APIs combined with automated DevOps allow software packages to be implemented in leaner, more discrete steps which lower the costs, risk, and time to value, allowing incremental benefits to be achieved in a more continuous fashion. Together with rich functionality that is highly componentized, with low-code hyper-parameterisation capability and AI-driven, automated and online data migration tooling and pre-integration with 3rd party software, today’s software providers make it easier, cheaper and faster for banks to transform.

In addition, the software-as-a-service (SaaS) option enables banks to consume, manage, and maintain packaged software in a secure, continually evolving, self-service platform while allowing them to develop their specific banking models through advanced configuration and extensibility capabilities at their own pace and desired frequency. This results in even greater business agility and speed as well as cost efficiency and transparency while providing enhanced security, resilience, and compliance. Banks can focus on innovation and their core business, while the software provider takes care of the rest.

Migrate and Consume on Demand – A New Paradigm

The key to a successful digital transformation is the smooth transfer of a bank’s existing data to the new platform. Traditionally, banks built the new solution first and subsequently migrated the data in accordance with the new platform. Next-generation data migration technologies allow banks to take over and understand this data much earlier in the process. Subsequently, banks can “consume” individual capabilities in accordance with the specifics of their business strategy and context. This means decoupling the actual data migration process from the subsequent consumption (or activation) of the migrated data along with the build of the new platform.

Digital Banking Transformation is Accelerating

Thus, with the compelling intelligent banking platforms of today that harness disruptive technologies to provide seamless scale and digital agility,  foster continuous innovation and dramatically lower costs, digital transformations can now be executed easily and with acceptable levels of risk enabling banks to successfully compete in  the world of open and digital open banking.

To learn more about our predictions for the future of retail banking, download our new whitepaper The Future of Retail Banking and the Case for Digital Transformation.

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Kanika Hope
Kanika Hope – Chief Strategy Officer