Published by Jessica Weisman-Pitts
Posted on October 31, 2022
By Jim Dolan, Partner, Technology & Digital, Mazars
There are some big ticket shifts coming for Banking when it comes to technology. Whether that be the mainstream acceptance of crypto, the demise of cash, strategic decisions to become a marketplace (or to serve one) or the long awaited seismic “Big One” of technical debt finally forcing a Core Banking re-platform…
Digital Transformation in some form is inevitable. The reason we feel this is a certainty is that there is a crucible of pressures on Banking Technology that is only intensifying such as regulation, competition from and amongst challenger firms, the requirement for agility (e.g. changing product rates, or withdrawing them completely as frequently as ordering a cappuccino), cost pressure, client expectations on instancy, 0% error rate on all services 24/7/365 etc. All of the age-old challenges of trust, transparency and security are the bassline to the new choruses of economic upheaval and a genuine, unignorable desire for truly sustainable finance.
While most Banks have invested in teams of talented technicians, adopted agile and are open to Open Banking, the forecast ahead is more of the same with a cherry on top. Acknowledging the world-class innovation and thought leadership that comes from the Banking sector, there are still several challenges truly justify the agenda for Digital Transformation.
Adapting to increased cyber threat
Consultants are well known for trying to sell through fear, but in this case, it is genuinely a case of stating facts about an unignorable challenge. Most organisations had a significant shift in their supply chain or staff base in the last two to three years for a myriad of reasons. These two factors are the key drivers of increased threat, that along with exponential rise in malicious activity from state actors to further stoke the aforementioned crucible. We all know the stakes are high here in terms of trust, share price and regulatory fines, so the ability to be aware and to transform to meet the constant, dogmatic push from ever innovating cyber criminals is paramount.
Getting things done vs working on the right things
IT departments, Digital Marketing departments and Innovation functions often chase the KPIs of delivery, output and staying within budget – the only KPI in Digital Transformation is to drive value from technology. That value doesn’t necessarily translate into cash, it can be risk-avoidance, regulatory compliance, customer satisfaction, employee satisfaction as well as potentially the old familiar goals of efficiency and cost. There are a lot of transformation functions valiantly sprinting on the treadmill of keeping up with everything previously mentioned – however, it is not just about “doing stuff”.
This operates on two levels: a disciplined and agile way of working to ensure that you are focused on value with old arch enemies of “The Business” and “IT” working together as seamless team unified in purpose; on top of this is the requirement for an actuating control mechanism that can intervene and constantly change and guide the course of Digital Transformation. Being big enough to say “Hey, we might got this a bit wrong” and then resetting staff, suppliers and shareholders on the right path. This is what true Digital Leaders are doing.
Post-Covid clean-up
Everybody did things fast at the start of the pandemic, there’s no judgement there and it has the benefit of being a ubiquitous fact. In recent times when we all rode the exciting rollercoaster of IFRS16 (and we are starting to see it with IFRS17 in our Insurance clients), some of us at the sharp end of the system implementation coined the phrase “Get compliant, and then, afterwards, do it well” – it feels there was the same spirit with uprating IT during COVID. Have you really closed out security challenges, tightened vulnerabilities, have a tight list of assets and patched them all to the right level? It’s a CIO with a strong heart that would boldly say “Yes” to all of those, and have the true capability to drive Digital Transformation in an organisation.
To most of us in the industry, the term “FinTech” is just “Tech” with a prefix to make it sound more special, expensive and scary. FinTech is at best innovation but more likely “newer Tech”. And without a strong value case, the tech isn’t transformational in a positive way.
So how do you ensure that your transformation efforts make a difference?
The first step is to not to jump to silver bullet solutions – look at what you need, where you want to go and hire some great people that are Rosetta Stones between the worlds of “Business” and “IT” and let them identify and maximise value through technology in your business. In my experience this rarely one “big bang” but more likely a chain of incrementally additional “little bangs”.
The second step is achieving understanding across the entire organisation that transformation is a journey not a destination. In Banking specifically, given the complexity of products, demands from the regulators, the new normal of continuous digital disruption in the industry and most products being digitally native by their nature, it’s going to be a long journey and likely to be a work in progress for some time.
When do you know you’re done with Digital Transformation? As a Bank, the answer is simple. We’re afraid to say that as inevitable is the requirement, so is the requirement to get on with transforming yourself into an organisation based on continual transformation. La plus ca change…
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