The three pillars of digital banking transformation in 2021

By Jason Tooley, Vice President EMEA, Dynatrace

The drive for banking transformation is stronger than ever, as the pandemic fast-tracked the shift to digital services. Consumers are increasingly leaving cash behind in favour of contactless payments, and using online or mobile banking to manage their finances. Even those who were more wary of these services before the pandemic have taken the plunge and seen the benefits of going digital. Highlighting the extent of this, research from London-based fintech Nucoro found that during the first month of the UK lockdown, more than six million people downloaded a mobile banking app for the first time.

Banking executives must now identify how they can meet the rising demand for digital services, while sustaining the value of in-branch experiences. The answer lies in creating a hybrid experience that unfolds as a single, consistent journey as customers traverse physical and digital channels. To achieve this, banks need to ramp up and realign their technology strategy to deliver a full-scale business transformation, based on three core pillars.

Pillar 1: Put the experience at the centre

Banks are serving a wider market of digital consumers than they’ve ever encountered before. These customers are all at varying levels of digital maturity, with their own unique needs and expectations. As a result, there’s no one-size-fits all approach. Teams are under pressure to create new functionality and improve the usability of online and mobile banking across all touchpoints to deliver more relevant and innovative services. However, personalisation alone isn’t enough; it’s customer experience that matters. As customers increasingly engage in omnichannel banking journeys, their expectations for a seamless, high-quality operational experience are rising in tandem.

For banks, the challenge is identifying how they can create an operational foundation to ensure great customer experiences across all channels. Many have seen that traditional strategies focused on front-end transformation are ill-suited to ensuring seamless omnichannel experiences. They are now placing equal emphasis on back-end transformation and operational excellence, to ensure they have a robust foundation with the agility to match their digital agenda. Re-platforming is key, so banks are migrating an increasing number of services from legacy infrastructure to cloud-native architectures. As this continues, the ability to maintain observability across hybrid, multicloud environments will be critical to ensuring seamless customer experiences.

Pillar 2: Refocus operations on customer value

Customer value should be core to everything the bank does to scale up digital innovation and bring new capabilities and experiences to market. To enable this, banking leaders need to embrace a more collaborative operational structure. This is best supported by small, flexible, and more autonomous teams created from the combination of IT, product development and line of business or service lines focused on a particular customer need, product, or service.

The responsibility for creating customer value belongs to all parties, so it’s critical to avoid creating silos to ensure performance is measured consistently. DevOps, cloud, and classic IT operational support functions need to align around the customer and their operational experience, without impacting the pace of digital change required by the business. That’s why there’s growing interest in driving more collaboration between teams, and increasing automation through AIOps, which requires technology and organisational transformation to achieve success.

This is changing the way banks operate, as the business plays a more central role in driving the technology innovation agenda. However, it’s also creating the need for more teams to understand governance and operational processes. The way teams combine their expertise determines how efficiently services can be operationalised and how customers view operational support. In contrast, operational service requirements ensure the growth in digital service complexity doesn’t require bigger teams or unforeseen costs. To enable this, banking leaders must equip their teams with data-driven insights, with service context and increased automation, based on artificial intelligence. This enables everyone to work towards service level objectives (SLOs) relevant to customers and aligned to operational excellence. Teams can therefore collaborate more effectively by identifying where their efforts can help create better experiences for customers and maximise value for the bank.

Pillar 3: Embrace an ecosystem approach

There’s a huge amount of innovation being driven by Fintech companies, which have been purpose-built for the era of digital banking. Rather than seeing these companies as competitors, traditional banks have a far greater opportunity to expand their market if they look to partner and integrate with their offerings. That realisation, along with the advent of open banking, has seen growing use of APIs. This has enabled banks to explore new ecosystem-driven business models and expand their services into new areas at far greater speed and scale, by leveraging third-party capabilities to create better customer experiences.

Banks are also extending that mindset to integrate with other next-gen technology capabilities. For example, by integrating with digital decisioning software, banks can automate processes such as loan application approvals. Connecting with natural language processing (NLP) solutions can enable customers to self-authenticate via telephone banking to drive efficiency and frictionless experiences. This is seeing a further re-platforming of banks towards API-driven architectures that marry digital experience, digital operations, and digital innovation. However, it also adds to the complexity increases driven by multicloud environments and cloud-based services. Automatic and AI-powered observability is therefore increasingly critical to scale operational capabilities and deliver on the promise of AIOps, accelerating innovation and delivering seamless omnichannel banking experiences.

The future of banking

Banks are undergoing a full-scale business transformation underpinned by digital transformation. As this continues and technology becomes increasingly critical to the customer experience, banks need to ensure they have a robust digital strategy in place. By basing their strategy on these three core pillars, banking leaders will have a far stronger foundation to ensure their offerings are designed and built in a consistent, aligned, integrated, and customer-centric way. Ultimately, that will be key to enriching their proposition in the future, by providing personalised financial services whenever and wherever they are needed, and great customer experiences in the process.

By Jason Tooley, Vice President EMEA, Dynatrace

The drive for banking transformation is stronger than ever, as the pandemic fast-tracked the shift to digital services. Consumers are increasingly leaving cash behind in favour of contactless payments, and using online or mobile banking to manage their finances. Even those who were more wary of these services before the pandemic have taken the plunge and seen the benefits of going digital. Highlighting the extent of this, research from London-based fintech Nucoro found that during the first month of the UK lockdown, more than six million people downloaded a mobile banking app for the first time.

Banking executives must now identify how they can meet the rising demand for digital services, while sustaining the value of in-branch experiences. The answer lies in creating a hybrid experience that unfolds as a single, consistent journey as customers traverse physical and digital channels. To achieve this, banks need to ramp up and realign their technology strategy to deliver a full-scale business transformation, based on three core pillars.

Pillar 1: Put the experience at the centre

Banks are serving a wider market of digital consumers than they’ve ever encountered before. These customers are all at varying levels of digital maturity, with their own unique needs and expectations. As a result, there’s no one-size-fits all approach. Teams are under pressure to create new functionality and improve the usability of online and mobile banking across all touchpoints to deliver more relevant and innovative services. However, personalisation alone isn’t enough; it’s customer experience that matters. As customers increasingly engage in omnichannel banking journeys, their expectations for a seamless, high-quality operational experience are rising in tandem.

For banks, the challenge is identifying how they can create an operational foundation to ensure great customer experiences across all channels. Many have seen that traditional strategies focused on front-end transformation are ill-suited to ensuring seamless omnichannel experiences. They are now placing equal emphasis on back-end transformation and operational excellence, to ensure they have a robust foundation with the agility to match their digital agenda. Re-platforming is key, so banks are migrating an increasing number of services from legacy infrastructure to cloud-native architectures. As this continues, the ability to maintain observability across hybrid, multicloud environments will be critical to ensuring seamless customer experiences.

Pillar 2: Refocus operations on customer value

Customer value should be core to everything the bank does to scale up digital innovation and bring new capabilities and experiences to market. To enable this, banking leaders need to embrace a more collaborative operational structure. This is best supported by small, flexible, and more autonomous teams created from the combination of IT, product development and line of business or service lines focused on a particular customer need, product, or service.

The responsibility for creating customer value belongs to all parties, so it’s critical to avoid creating silos to ensure performance is measured consistently. DevOps, cloud, and classic IT operational support functions need to align around the customer and their operational experience, without impacting the pace of digital change required by the business. That’s why there’s growing interest in driving more collaboration between teams, and increasing automation through AIOps, which requires technology and organisational transformation to achieve success.

This is changing the way banks operate, as the business plays a more central role in driving the technology innovation agenda. However, it’s also creating the need for more teams to understand governance and operational processes. The way teams combine their expertise determines how efficiently services can be operationalised and how customers view operational support. In contrast, operational service requirements ensure the growth in digital service complexity doesn’t require bigger teams or unforeseen costs. To enable this, banking leaders must equip their teams with data-driven insights, with service context and increased automation, based on artificial intelligence. This enables everyone to work towards service level objectives (SLOs) relevant to customers and aligned to operational excellence. Teams can therefore collaborate more effectively by identifying where their efforts can help create better experiences for customers and maximise value for the bank.

Pillar 3: Embrace an ecosystem approach

There’s a huge amount of innovation being driven by Fintech companies, which have been purpose-built for the era of digital banking. Rather than seeing these companies as competitors, traditional banks have a far greater opportunity to expand their market if they look to partner and integrate with their offerings. That realisation, along with the advent of open banking, has seen growing use of APIs. This has enabled banks to explore new ecosystem-driven business models and expand their services into new areas at far greater speed and scale, by leveraging third-party capabilities to create better customer experiences.

Banks are also extending that mindset to integrate with other next-gen technology capabilities. For example, by integrating with digital decisioning software, banks can automate processes such as loan application approvals. Connecting with natural language processing (NLP) solutions can enable customers to self-authenticate via telephone banking to drive efficiency and frictionless experiences. This is seeing a further re-platforming of banks towards API-driven architectures that marry digital experience, digital operations, and digital innovation. However, it also adds to the complexity increases driven by multicloud environments and cloud-based services. Automatic and AI-powered observability is therefore increasingly critical to scale operational capabilities and deliver on the promise of AIOps, accelerating innovation and delivering seamless omnichannel banking experiences.

The future of banking

Banks are undergoing a full-scale business transformation underpinned by digital transformation. As this continues and technology becomes increasingly critical to the customer experience, banks need to ensure they have a robust digital strategy in place. By basing their strategy on these three core pillars, banking leaders will have a far stronger foundation to ensure their offerings are designed and built in a consistent, aligned, integrated, and customer-centric way. Ultimately, that will be key to enriching their proposition in the future, by providing personalised financial services whenever and wherever they are needed, and great customer experiences in the process.