The 5 pillars of a bank’s digital transformation journey

The banking and financial services industry is going through a historic change today that is being driven by the constantly evolving preferences of modern consumers. New devices and digital banking tools have given consumers the convenience of banking on the go and this has caused an exponential increase in expectations for banks to align their offerings to address the needs of their ‘always on’ customers. An industry which once was known for its legacy systems, has now witnessed rapid transformation in recent times in order to reduce operational costs, increase top-line revenues, mitigate risks, and stay competitive in a race that is being disrupted by players of all sizes. Being digital-first is no longer a ‘nice-to-have’ but rather a ‘must-have’ aspect to survive. In fact, a recent study by Accenture revealed that 78% of consumers are willing to bank with a tech firm like Amazon or Google. This indicates that banks unwilling or unable to adopt digitally-based services may lose customers to new age non-bank competitors.

Digital transformation is not a one-time exercise or a reactive process. It is a continuous journey that has become an essential exercise for every bank to stay relevant in today’s constantly changing financial services landscape.

A successful digital transformation journey depends on 5 essential elements:

1. Senior Management: It is imperative to have a direct buy-in of the program goals from a sponsor who has been presented with a holistic and realistic view of the benefits, risks, and budget involved. Senior management involvement includes everyone at the CXO level and key business heads.
2. Sustainable Goals: Budget overruns often derail digital transformation projects and the project teams must be economical with the goals set out to achieve.”
3. Risk Management: Progress in any digital transformation journey is expected to open up various areas of risks ranging from IT security to regulatory compliance and operational risks. This is due to a sudden increase in channels of interaction, points of failure, scale of operations, rapid ramp up of IT hardware, evolving regulatory requirements, and even reliance on open source software and cloud computing. These risks need to be viewed constructively as an avenue to strengthen processes and operations. The benefits achieved through digital transformation exercises are likely to outweigh these risks by a very large margin. However, it is essential to account for all risks and frame a concrete risk management strategy early in the journey and implement the measures needed to mitigate them.
4. Strong Governance: A strong and effective governance model is critical for continuity and success in a digital transformation journey. Some key guidelines for governance include:

• Setting up a steering committee consisting of sponsors, CTO, business heads, IT heads, and technology partners
• Keeping the program abreast with new technology and user experience development practices with the help of innovation and user experience teams
• Sharing digital assets like micro-applications that are reusable across projects to avoid redundancy and rework
• Maintaining a strong change control board to manage a fine balance between benefits, cost, risk and timelines pertaining to any change. With the early adoption team consisting of people from technology and business to lay the foundation of the program and then train followers and share best practices
• Practicing agile methodology with product owners and scrum managers for effectively managing sprints and backlogs

5. Agile Structure: Lastly, there should be a stable and scalable low-code digital experience platform based on componentized architecture in place that powers rapid development and enhancement of digital solutions while providing continuous development and seamless integration capabilities using agile methodology. This approach also needs to include people and processes across organizations that base its work on a strong feedback mechanism to ensure success and course correction on time.

With the advent of improved digital banking applications, consumers now have the options to have engaging digital user experiences just with a few taps on their smartphones. Clearly, “digital-first” is the way forward for banks, thanks to the speed, mobility, and real-time accessibility it offers. And, in a dynamic business landscape where change is the only constant factor, a digital transformation is the surest way to stay ahead of the competition.

–           S. Sundararajan is Executive Director, i-exceed Technology Solutions