The old dichotomy is broken: IT can no longer be a back-office function only, but at the heart of everything.
With a plethora of new fintech activity intensifying competition, yet more complex legislation, and wobbling consumer and government confidence levels, banks have never been more under pressure. BearingPoint believes success lies in finding and executing answers to five, inter-related, questions.
1. Do you believe that technology is now part of front office delivery?
New technology must be integrated in your systems and processes from back to middle and front office. Too many banks have been obsessed with migrations, improving operations and reengineering systems, all of which are important to improve margins. But often this has been at the expense of neglecting the most important stakeholder; the client - where the revenue comes from.
2. Have you the will to start again with your technology suite?
This is perhaps the most difficult hurdle to overcome. In so many walks of business, it’s often easier to start from a ‘greenfield’ site than it is to retrofit a ‘brownfield’ one. Nowhere is this truer than in today’s banking sector. There are so many new technology-enabled online-only, app-driven banks now which are eating into traditional banks’ market, especially in the Gen Z and start-ups segments. The barriers to entry are also crumbling.
Often for banks the challenge is to serve two customer extremes. One catering for the older, less tech-savvy but still a key profitable demographic. The other, Gen Z individual or small, emerging start-ups who value speed, efficiency and ease of use 24/7, and don’t need to speak to anyone. The big challenge will be to serve all customer types, but it can be done if you think afresh and smartly, and not by retrofitting.
Are you prepared to change your bank’s culture?
None of this transformation can be achieved without your IT, operations and customer-facing staff collaborating closely. Here, soft skills like emotional intelligence and diversity of thought are crucial. If you don’t have these, you’ll need to retrain or recruit for them. It’s crucial to break down silos, this will mean radically changing how your teams work with bankers, operational and technology staff working as part of the same team. Banks will have to ensure each individual’s competency and contribution are valued!
Do you really think you can do it alone?
FinTechs have been taking the kudos lately but they probably won’t have regulatory knowledge, strict risk compliance processes, critical thinking, and experience with a huge variety of financial client types – what it takes to get a banking licence. Traditional banks, however, tend not to be able to build advanced technological platforms which offer (online-only) lightning-speed transactions – what so many young customers and emerging-firm account holders want today. Chief Operating Officers have to be more truthful about their own shortfalls: building an appropriate ecosystem for the 21st century and forming alliances with fintech firms is the order of the day.
Do you have concrete plans for execution?
We believe integrated teams are crucial to success. That means making sure you have the right team to lead your digital transformation, for example, by appointing your most senior IT manager onto the board of directors. Because today the old dichotomy is broken: IT can no longer be a back or middle-office function only; it must be involved at the front office too – and at the heart of everything a bank does.
