Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.




Antoine Hemon-Laurens, banking customer communications management expert at GMC Software Technology

When it comes to implementing digital transformation, traditional banks are like deer caught in the headlights. They must answer a number of looming questions: What are the critical business priorities? What are the right technologies to use? Will they be able to implement changes at the required speed? Will the IT team be able to cope with an ever-growing amount of work derived from an explosion of new competitors, new communication channels, new regulations and new technologies?

The stakes are high and missteps can be costly. According to a 2015 report from McKinsey & Company, investment in fintechs by venture capitalist firms rose to $12.2 billion in 2014 from $4 billion in 2013. There are more than 12,000 fintech companies moving into every banking activity and market, the report said, and up to 60% of traditional bank profits and revenues could go to these fintech companies in the next 10 years.

Incumbents, unlike digital startups, have to deal with a large number of legacy systems and processes that hold them back from innovating. A well-known bank, for example, mentioned to me that it managed to drive down the number of internal legacy systems and processes to less than 8,000 from 11,500. While that is a major achievement, the bank still has 8,000 legacy systems and processes that keep most of its staff busy performing maintenance and managing crises instead of engaging in digital transformation tasks. Exacerbating the problem, the bank’s transformation has also been slowed by a culture clash between more established staff and those willing to implement change.

For these reasons, traditional banks are not likely to be able to completely match the agility and nimbleness of a fintech startup. But that doesn’t mean all is lost.

One strategy bank executives can employ to minimise these issues is to split the bank’s IT team into two distinct groups. One group should be charged with maintaining legacy systems with a mandate to reduce the number of systems and processes while insuring a continuum in the traditional bank operations. The group should be made up of professionals with a high degree of knowledge in legacy technologies such as COBOL programming language, mainframe systems and more. They should also have a deep understanding of the traditional bank business and the way it has been previously executed. This team is critical to ensuring today’s revenue and managing operational risks.

A second group should be appointed to speed up digital transformation. This is a leaner, agile and risk-taking group whose main objectives are to deliver new digital capabilities. This group needs to operate autonomously from the rest of the IT team and should be evaluated based on its capacity to bring more convenient products and solutions to the market.

Success for this second team will require strong support from organisational leadership. While this group should be given the right to fail with new ideas, success will also require leveraging what the bank does best rather than trying to completely reinvent the wheel for each of the solutions they implement.

This two-pronged approach lets traditional banks continue leveraging their historical strengths and gain the agility and innovative offerings that today’s financial consumer demands.

Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate


Newsletters with Secrets & Analysis. Subscribe Now