Retail banks and other financial institutions face many of the same challenges other mature industries confront in the digital era, including the three truths of digital disruption:
- Consumers are in charge. Many customers are already thinking and acting “digital” and will force financial institutions into the next market-facing move. The customer experience (CX) for digital banking services and products has become the driving force for many retail banks.
- Asymmetric competition exposes traditional banks to additional, unforeseen pressures, such as fintech start-ups or even more disruptive concepts such as blockchain and decentral, borderless currencies or algorithm-based contracts.
- Successful companies minimize their asset base by making use of new partner ecosystems and digital platforms that incorporate a mix of IT and non-IT partners. This could mean a shift in the retail banking industry away from closed-shop production to a CX-centric service orchestrator of (retail) banking digital products and services.
This is not theory. As advisors specialized in the area of Digital & IT Operating Model (D/ITOM) design and Service Integration & Management (SIAM), we experience this change in strategy and mindset with our customers on different levels every day. It has become the foundation of every interaction and engagement. And the question remains the same: How can we and other strategic partners enable and accelerate the transformation to digital – on both a technological and organizational level?
For example, one of our retail banking customers recently decided to accelerate the digital transformation of its business operations. This bank bases its growth strategy on a sustained expansion of product offerings propelled by a significantly reduced time-to-market for new digital banking products and services.
The bank’s situation highlighted the first two “truths”: the need to accept and deal with the new reality of consumers being in charge and to respond to asymmetric competition. Ultimately, the solution also demonstrated the third point — the value in reducing the asset base by building up an entirely new partner ecosystem promising the best success for the bank’s digital business future.
We became the leading partner for the digital core and the technology enabler for the bank’s digital transformation – alongside best-in-class core banking software partners, market data partners, banking platform partners and API providers. As integrator, we helped streamline all of these elements to support the bank’s ultimate digital business target: Profitable growth based on new digital products and services that deliver an extraordinary customer experience.
Bringing that to life meant that the bank’s lean IT organization had to focus relentlessly on business and customer goals. At the same time, the bank needed to onboard, integrate and orchestrate the new partner ecosystem and related services.
This is where SIAM came into play.
SIAM partner integration services involved understanding the bank’s digital products and their subservices, partners and end-to-end interdependencies. The services also covered “profiling” all ecosystem partners to derive the most efficient onboarding approach and, once operational, continually integrating and orchestrating partner collaboration.
To meet its ultimate goal of an improved customer experience and strategic priorities focused strictly on business, the bank elevated our integrator role to include cross-partner integration for enterprise architecture, IT risk, and security and compliance. This tight partnership led to the following three conclusions:
- Transformation requires full digital immersion. Our customer now understands and embraces the changing role of digital and its transformational implications to the organization’s business models, digital customer experience, business process transformation and technology enablement.
- The need for partnerships. The future of digital cannot be thought and achieved without a smart, flexible and reciprocal partner ecosystem that encompasses IT partners, non-IT partners – and even sometimes competitors.
- Embrace disruptive technologies. Banks would benefit from SIAM services that continue to evolve into a more scalable and broader service type encompassing a customer’s entire digital partner ecosystem and enabled by disruptive technologies such as DXC Bionix and integrated digital collaboration and operating models.
Based on their experiences with digital transformation, the bank and many of our other financial customers and business partners plan to continue this journey towards next-generation digital ecosystem integration services. Digital transformation can happen, but it requires that all sides — customer, integrator and business partners — come with an open mind and a shared vision of a digital future.