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Giving the Digital Challengers a Run for Their Money With Two-Speed IT

Published by Gbaf News

Posted on December 9, 2015

5 min read

Last updated: January 22, 2026

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By Rahul Singh, President, Business Services & Financial Services at HCL Technologies.

The financial services industry has experienced significant disruption over the past few years, as digital technology innovation has ushered in a new era of intense rivalry. On one hand, modern technology giants such as Apple and Google are extending their relationships with customers to branch out into new territories such as payments, which have traditionally been the mainstay of financial services institutions (FSIs). On the other hand, new start-ups such as payday lenders, challenger banks and Bitcoin are using digital technology to create new models of lending, borrowing, financial planning and even currency, forcing traditional FSIs to work harder for their money. Established firms must therefore adapt and compete with these new contenders.

Outside-in thinking

It is becoming increasingly clear that rapid adoption of digital technology holds the key to competitiveness in the current financial services landscape. Historically, the industry has been an early adopter of new technology, being the first to adopt real-time data stores, several object-oriented technologies and messaging tools. However, it tended to focus on how new technology can improve existing processes, instead of enabling the business to better serve the market. IT departments of the industry have been risk averse, choosing predictability over improvement and proven solutions over experimental ones. This approach does not work well with the rapidly changing nature of digital technologies, with their rapid delivery cycles and quick obsolescence.

The newly emerging competitors are seizing the advantage by flipping this inside-out way of thinking on its head to focus on how technology can deliver new, disruptive services to the market. The new digital start-ups and challenger banks are also able to realise a significant advantage since they don’t have a legacy infrastructure already in place. Since their technology stack is clean and their development costs remain relatively low, they can afford to experiment and tweak their services regularly, making data-driven decisions based on feedback from the market. This is enabling them to develop highly targeted, customer-centric applications for a highly segmented market, allowing them to improve customer satisfaction with greater agility. Ultimately, this approach lets them deploy new solutions much faster and with less fuss than their more established rivals.

Facing up to facts

If they fail to address this imbalance, traditional financial services firms will expose themselves to a number of significant risks. Firstly, the costs of delivering traditional IT will rise in relative terms, as modern solutions such as cloud-based application stacks and consumer technologies increasingly become the norm in enterprise environments, significantly reducing the costs for those able to harness them. Customers will also start to turn more readily to organisations able to meet them on their own terms by embracing modern digital technologies in the same way that they do. As such, traditional FSIs could be relegated to becoming merely transactional service providers, rather than being seen as a source of advice. The greatest risks come from the continued march of non-traditional competitors using digital technology to launch services such as peer-to-peer lending, crowd-funding and other new, innovative offerings that erode FSIs’ value-added service revenues.

To succeed in the digital age, traditional FSIs must therefore develop an IT management model that develop an IT management model that supports their legacy infrastructure investments at the same time as adopting new digital solutions rapidly Since the approaches required to meet these two objectives are clearly at odds with one another, FSIs must develop a two-speed IT architecture, decoupling back-end legacy systems from customer-facing digital services and developing the two in parallel rather than at the same pace. However, that’s not to say that legacy and digital solutions should be developed in isolation from one another. They must be fully integrated and developed collaboratively, or there is a risk that the two streams will conflict and create challenges in resource allocation, as well as incompatibilities that prevent them from functioning effectively.

The two-speed path to success

FSIs must therefore ensure that they develop a solid working model to support two-speed IT to ensure it is a success. First, they need to create a fast-paced IT model specifically focused on new, digital technology innovation. The teams responsible for this should be able to use the organisation’s legacy systems to their full advantage to leapfrog over the challengers by gaining the benefits of existing investments and the expertise of the teams responsible for maintaining them. Second, they must strive to encourage collaboration between the two groups to ensure they are both pulling in the same direction to drive competitive advantage for the business. To achieve this, traditional vendor relationships favouring packaged solutions will need to be phased out in favour of technology partnerships with the new generation of service organisations experienced with both legacy infrastructures and the integration of digital technologies. These new partners can collaborate closely with FSIs to help them to unlock the full potential of their existing assets.

Two-speed IT is a clear departure from their traditional ways of working, suitable for established FSIs looking to remain relevant in an increasingly digital world. By adopting this dual approach, they can enjoy the best of both worlds, becoming far more agile in adopting new digital technologies and delivering better services for customers, without leaving their highly reliable legacy assets by the roadside.