Digital transformation in banking – how to ensure success?

The concept of digital transformation has been circulating in the banking and financial services sector for many years, but despite its overuse, digital transformation is still a long way off for most banks.

This is not a criticism of the bank, as the complexity of becoming a first regulated entity cannot be underestimated, despite the new technologies and amount of knowledge that make it possible to achieve this goal better. A lot has been described about banking failures, but how do you see them succeeding in digital transformation? I have been working in the banking industry for thirty years, helping financial institutions to develop technological solutions that strengthen their business. In my opinion, there are three main steps that banks need to take to achieve a real digital transformation, namely:

1. Take digital conversion from above

Digital transformation requires much more than the application of new or improved technologies; however, it requires an analysis of how the business is run across the organization and the close collaboration between business and technology. An effective digital transformation strategy must include new technology decisions for IT experienced people to develop technological capabilities and align with the bank’s strategic priorities. Banking IT work is traditionally seen as very different from the main business strategy, and CIOs are often not involved in strategic decisions. This old arrangement needs to change if banks want to properly integrate modern technology into their business. Technology is everywhere and it needs to change the way digital transformation is organized. Through these first steps, the bank can work to establish the alignment between IT and the core business.

With changes in governance, banks need to change the way they operate now. The digital transformation is a long-term process, but banks operate in the short term, often focusing on a 12-month investment cycle and prioritizing annual returns. The secure nature of the bank also entails the creation of a structural committee to oversee the change project, a framework that further facilitates the change process. For a bank to function as a technology company, it must think, act and function as a technology company. This means giving up short-term thinking and moving to a smarter business model that encourages too much decision-making in the office and collaboration and decision-making.

2. Reducing the burden of technology

Technology is there to help a company achieve its goals, but many banks are overwhelmed by technology. This is because banks often rely on old systems, and by accumulating significant technological “debt,” they create open, monolithic, and poor-quality systems that ultimately burden society. As a result, the bank spends a lot of money on their support, but stay tuned!

If you consider new banks or executives who have been successful in the digital transformation, you will see that they do not have these problems because the banking sector is light, easy to maintain and supports the development and rapid introduction of new financial products. . These modern platforms are hosted in the cloud and use an API for simple and easy integration, which offers specific advantages over traditional banking technologies. The only question is, how should banks approach them?