Bank to the future - banks should embrace change

The concept of digital banking requires a change of mindset for many players, outdated legacy mindsets must shift, with banks emulating retailers to sustain long-term growth

For some of us, the convenience and seamless ease of digital banking can be taken for granted. Whether it is cashless payment for the groceries you’ve just purchased or the online payment transfer from one bank to another, these invisible banking transactions happen more easily for some compared to others.

That is the state of banking in Southeast Asia – where many banks are aspiring to become digital ready in the next few years and some are still struggling to respond to modern-day customer requests through their legacy systems set up 20 or 30 years ago.

Research by Avanade found that only one-third of banks’ systems are “modern” (i.e. the next wave of IT technology to empower business in the digital world), while the remainder are either legacy or conventional. If and when banks embark on a digital transformation journey, the focus is often centred around compliance, privacy and security and cost. What most banks don’t realize is that digital transformation is also a big cultural program – building talent, shifting mindsets and creating a value proposition for its employees and customers to get onboard this journey.

Embrace digitalization to create experiences without boundaries

We are at the dawn of new types of consumer and employee experiences, but many financial services providers and institutions are still stuck trying to manage design across desktop and mobile. The world is quickly moving to a mobile-only society where mobile is any extension of a person – and this is felt most in emerging economies where societies are leapfrogging into the likes of mobile money, e-wallets and cashless transactions.

Creating these immersive experiences without boundaries requires a new mindset and an IT architecture intervention. According to Avanade’s Trendlines research, 80% of IT decision-makers believe that not modernizing IT systems will negatively impact the long-term growth of their organization. Companies will have to revamp their IT architecture, so consumers and employees can enjoy frictionless experiences that augment their lives with relevant information presented across any platform.

When intelligence meets design

The current legacy mindset must shift because future banking applications will not look like what we have today. In fact, forget today’s devices and interaction models. Banks need to prepare their designers, data scientists, developers and infrastructure to support new design paradigms and connected experiences for consumers and employees always on the move.

Research from the Center for Information Systems Research (CISR) at MIT Sloan School of Management shows that firms with the best employee experience achieve business benefits, including double the customer satisfaction, twice the innovation and 25% greater profitability compared to competitors.

Forward-thinking executives are putting their data scientists and creatives side-by-side on cross-discipline teams at the earliest stages of product and service creation – with a goal of improving both the employee and customer experiences. It’s time to embrace change. Banks need to:

 Prioritize and re-engineer end-to-end employee experiences to be on par with your customer experiences.

 Form design, data and business development squads to change the way of working – where people and ideas are connected, systems are integrated, and you balance new customer and employee experiences with privacy and other concerns.

 Examine your business model for ways to foster greater creativity and a focus on data science across all systems and business functions. Ensure that experimentation and algorithm development are deeply ingrained in everything your business does.

 Prepare for the future enterprise app model in which enterprise technology will be AI-supported, model-driven and built by empowered citizen designers and developers.

While it is true banking will always be needed, if banks do not modernize to serve their customers as retailers have done, they will not be poised for long-term success and growth. Brick and mortar banks are less prevalent, and we are in a digital world. Ensuring inspiring employee experiences will improve customer experiences and both audiences can benefit from the digital modernization these banks should be considering with these audiences in mind. The future of banking and finance is at the tap of a button.

Omer Ali Khan is ASEAN general manager, Avanade