Many monetary processes had been created centuries in the past. When know-how arrived, we automated these historic processes to make them extra environment friendly. We didn’t essentially focus upon the right way to make them simpler, as the main target was on the right way to scale back prices.
Years later, we’re paying the value.
The problem is that banks automated outdated processes for accounting, credit score, shopper onboarding, compliance … effectively all processes, and put them into structured code on mainframes. Because the world developed, the financial institution didn’t restructure the code of the processes. Consequently, the processes are locked-in.
Now, we would like versatile processes and versatile code. We wish to be agile and networked. We wish to be hip and funky. Factor is that you simply can’t be agile, cool and versatile, when you’ve got programs that lock you in and handcuff you to a world the place it takes greater than a decade to vary, as highlighted yesterday with NatWest/RBS.
I spotlight this concern continuous as it’s on the coronary heart of digital transformation. Some banks have been making an attempt digitally rework for a decade. They’re nonetheless making an attempt. It’s laborious. The principle downside nonetheless is when did they begin, as some haven’t even began but.
Whenever you realise that the programs have locked within the processes and the constructions and the operations in order that they can’t change, you then get up to the issue. The issue is: what can we do about this? and, if the reply is, it’s going to take us ten years, then the response ought to be: what the hell?
Financial institution leaders actually need to place the pedal to the metallic and speed up digital transformation quick. I’ve seen so many banks altering gradual, altering within the mistaken course, misunderstanding what transformation means and doing it mistaken.
Transformation to be digital is nothing to do with know-how. It begins with buyer journeys, worker experiences, processes and inside design. Begin with design. Then you definately layer on prime of your designs cloud-based constructions, and guarantee they’re open.
Open, versatile, cloud-based constructions primarily based on reimagined course of design is vital to digital transformation.
Now, I do know this isn’t simple – I’ve by no means stated it was – however the ticking time-bomb for banks with outdated constructions, outdated processes locked-in by outdated applied sciences and outdated programs is about to blow up this decade. That’s apparent when you’ve got hoards of FinTech designers seeking to assault the market.
For me, it’s underlined by what we’ve seen in music. In 2000, most music was bought as CDs; in 2010, it was bought by Apple; immediately it’s streamed. 83 p.c of music consumption in 2020 was via streaming.
You can level to many different areas from Netflix to Amazon and see that in only a decade, the shopper journey is completely different and it’s digital.
For a financial institution to take 13 years to vary a course of is ridiculous within the twenty first century. You could speed up.