Nothing gets us excited like new technology. The showcase of some breakthrough, though unproven and as yet impractical, instantly aligns itself to our deepest desires. It answers to some unstated need and becomes simply irresistible. Alas, the promises don’t pan out all the time. Remember Google Glass, Facebook Phone, Google+? And now – AI, Quantum Computing, Drones!
We hard nosed bankers and fintech experts are just as susceptible to these digital charms as the next man. The obsession with wearables is a recent case in point. We are hungry to imagine use cases for this technology, to integrate more deeply into the customer’s lifestyle. What we intuitively know, and sometimes refuse to recognise, is that new technology like wearables makes more sense when you imagine an ecosystem. When we orient it around goals not necessarily presented on the wearable, but which are enabled by it. For instance, goals like ‘making our customers healthier’ or ‘more informed’ (better alerts). But imagining a use case for technology, instead of harnessing it to achieve an aspiration, is like putting the cart before the horse.
Technology cannot be allowed to drive business. The first step is to finite scope the value propositions, the next step to define digital aspirations. The third step, many believe, is to take the plunge into the digital abyss of complexities and unknown outcomes. While not completely taking out the thrill of a digital transformation journey, I would like to propose that there is an alternative, less stressful way of going about it. Before we get there, a small parenthesis on taking stock.
Understanding Where We Are and What We Need
Imagine you are a Universal Bank, one that wants to make its customers more financially healthy, keeping in mind their goals. You can look into your own ecosystem or a different merchant ecosystem to provide particular needs – say, a BMX bike for my son in a year. You connect dealers, ranked by other people, and then personalise it for me with a quick loan. You need to then invest in the right kind of tech – one that assesses data readily available with you. Then invest in a good experience platform to match and engage with me as an individual. The ideal channel could be an email, or a social network, or your own app.
You will need the ability to connect, personalise, and ensure some exclusivity for me, your customer. You might not want to be the platform, you might not want to be the first point of recall when I consider which college to choose. In such an instance, You may decide to defer such aspirations to other players aka ecosystems. In other words, you will make your technology subservient to your aspiration.
Are you carried away yet? Good. Now for a small reality check. Like every bank, you might be in a particular stage of your evolution. You might have wants and digital aspirations, but you are also straddled with needs from legacy. You might have a problem configuring products for a quick launch; you might have a sub-par channel with a sluggish experience or because it offers only a fraction of your repertoire of products. You might have siloed channels across mobile, online and social media, all hooked on to a legacy core. The Damocles’ Sword of compliance might be swaying a little too hard in the ever-evolving winds of regulation. You might have a wealth of data but no effective means of distilling insights from it.
When weighed down by legacy on the one hand and pressured by business to accelerate on the other, it is easy to capitulate in one of two ways – press the pause button and wait until the waters are calmer; or become completely reactive, and engage in a series of quick tech fixes that promise to verticalize solutions but end up creating more silos instead.
There is no on-size fits all. Yet, a certain logic can help in prioritizing.
Priorities on the Digital Journey
No matter what the distractions are, regulations always take top priority. Unless the foundation of compliance is firm, the future of any technology you deploy – however revolutionary – is uncertain. For a non-banking example, take a look at Napster. It was certainly a game changer in file sharing, but due to its scant regard for copyrights, it tanked spectacularly. Or observe the SEC’s crackdowns on ICOs in the cryptosphere. Taxes and retrospective fines levied on projects that mushroomed without aligning themselves to policy. Or the recent trial & immediate backtrack by Robinhood in launching the Savings/Checking accounts.
2. Data Strategy:
Data is the new oil. It is abundant, world-changing and precious. The trick is to be able to mine it and process it effectively. A strong strategy for data – distilling the vast troves of structured and unstructured data from within, triangulating and converting to actionable insights – will feed into your digital aspirations. Among many others, two factors will help drive productive usage. One, proactively working with customers on "consent concept" rather than waiting for increasing Privacy regulations. Two, utilizing the insights to create wise & contextual interventions in the User Journeys.
3. Customer Experience:
Once you’ve figured out how to make your data work, deploy it in a rich, integrated user experience platform. A platform that focusses on intuitive and engaging experience for the User. A platform that minimises the workload on your core. A platform in which all your channels are integrated work modules instead of discrete elements – anything that happens on one channel is instantly reflected on the others. A platform that brings in business agility – launching segment specific propositions. And uses your data to bake contextual intelligence into every experience.
4. Work Your Core:
Always good advice, whether in the gym or in the bank. You know it is time to revisit your core banking system. Why put it off? The age of rip and replace is past, after all. Can you modernise your core progressively? Can channel system handle it? Would you want to shrink it over time, or to adopt an API-first architecture? These are all possibilities here and now.
The beauty of these digital priorities is that they coexist, without having to supercede the other. Regulatory requirements are constant, so you might want to hive off a team to monitor and handle it on an ongoing basis. The study and analysis of data too is an immediate and ongoing requirement. If you go core upwards, it needs to handle your channels and existing business fabric without dropping the ball and if you take a channel-first approach, it needs to be more than a pretty face – lighten the load on your core and work in a self-sufficient manner.
When our aspirations are cast in stone, and our priorities clear, digital transformation can be a fulfilling, exciting undertaking.
Varadarajan is an accomplished Business Technology leader with deep domain expertise in Financial Services, having worked extensively across various banking products such as Digital banking, Core banking, Private banking, Transaction banking and Investment banking