Banking is steeped in tradition – particularly when it comes to image. It is hard to think of a dress code that evokes a stronger stereotype than the Gordan Gekko red braces, pinstripe suit and shiny silver cufflinks. But change is afoot, as a new wave of button-loosening fintech firms enter the market – and it is not just the dress code they are changing, it is also the old ways of working.
It is not wholly surprising that the wave of digitisation sweeping the industry has been met with a degree of caution by many senior figures. C-level execs find themselves leading new teams from a generation far more familiar with the technology, and it can be difficult to create a culture of digitisation from the top down.
Adapting to these digital changes and confronting them with efficient solutions across all lines of business is key to ensuring banks remain competitive. Bringing digital capabilities up to speed has become essential to a banks’ ability to adapt to the new market dynamic. However, the level of research and planning required to implement new services puts large banks at an immediate disadvantage. After all, the same rules don’t apply to smaller, younger, more technologically savvy companies without decades of technology debt to carry around. Moving too slow into digital may mean that the damage has already been done and the bank lost out on market share.
Integrated digitisation is necessary
Efforts to digitise can be seen across the industry – voice passwords, user-friendly apps and robo advisers are all positive steps. But for its full potential, digitisation needs to be incorporated throughout, not just in the customer facing channels. Integrating front-to-back technology frees up resources and streamlines business. Scanning paper into a PDF, for example, is not “digital” as it perpetuates content that cannot be easily processed by computers. Encouraging clients to use smart forms and submitting electronic orders, on the other hand, is clearly a better way forward. On top of this, c-level execs need to ensure that they and their employees have an understanding of new technologies while also encouraging innovation in day-to-day activities so that fluidity becomes the norm, taking a leaf out of tech giants books.
A key issue remains as to what the most effective way is to implement digital transformation. Banks who retain a quarterly ‘water-fall’ release cycles find themselves quickly behind the curve. This is why an ‘agile’ approach to IT solutions delivery and change is essential, asking project and IT operations teams to carry out small but very frequent modifications in an iterative process. This calls for a change in the business operating model, bringing the relationship and level of involvement between business and IT much closer to each other. It is a learning curve both ways and takes time to master. Business needs to accept that daily work with agile IT teams is part of their job. IT needs to learn to be much more business savvy. This is a cultural change that needs to be supported accordingly.
Modern technology is like fintech workers are to banking attire, very different from 10 or 20 years ago when many, if not most, current banking platforms were designed. The underlying database and application technologies, and the fundamental engineering behind them, have little to do with how firms such as Amazon, Google and Apple run their IT today. Few IT departments are fully up-to-date on the latest engineering options that could be used to build systems in more efficient and fast ways. As a case in point, the databases and integration fabrics underlying “big data” platforms can be used for building business applications in addition to analytics. All this requires mindset and skillset changes in IT. Going agile, without changing at least some of the technology platforms used to build and operate business applications, is akin to driving in the first gear only. You can get going, but you will not get far fast.