In this blog, Guy Griffin, Client Partner for Banking & Capital Markets at DXC provides unique perspective into how the pace of change is often affected when a technological innovation gathers critical mass in terms of distribution base, acceptances, and capability for banks and building societies, and why they should not ‘run in a sprint wearing wellies full of water’.

In an era where almost everything in our lives is available on-demand and customers expect instant interactions to take place on multiple interactive devices, some banks and building societies have found themselves backed into a corner.

Embrace a ‘digital-first’ approach

This is because banks and building societies that have operated on a legacy infrastructure or a branch-first model have not just been unwilling to keep pace with the rise of digital disruption but have been completely unable to do so. To provide an analogy, they’re bringing wellies full of water to a 100m sprint field filled with cutting-edge trainers and protein supplements

In order to get back in the race and compete with those wearing cutting-edge trainers, the correct footwear is required. However, the first step is getting out of those water-filled wellies! In a similar way, evolving any bank or building society (or any organisation for that matter) to be truly ‘digital-first’ requires substantial re-wiring of the core business systems and structure. Technology is becoming more sophisticated and pervasive throughout banking.

Banking evolving at the pace of change

Every technology was born to answer a need, and with every need is a human. Banks and building societies must implement design-thinking around the whole customer journey when they create a new digital interface, such as an app or website.

Putting the customers at the centre of every experience will yield suboptimal results. Banks and building societies cannot evolve if they don’t understand how humans interact with technology. This makes it essential to bridge the gap between the technology and human during the design-thinking phase, with the value of the customer experience being a key differentiator.

Those who innovate with a customer-centric approach will succeed in bringing down the cost of transformation for the digital customer and realise greater adoption and loyalty.

Whilst conventional wisdom is to simply ‘shut for refurbishment’, you can’t do that with a high street bank or building society because the risks are considerably high. Each second that goes by every day, customers and staff members expect all services to be available instantly and work flawlessly, and also expect that all relevant regulatory boxes are expected to be ticked.

Whilst it is impossible for a bank to turn into an agile, digital-first organisation overnight, it is, however, possible to make iterative changes which deliver benefit faster than even the hypothetical ‘complete closure for refurbishment’ could. Creating a modular solution to sit beside the existing infrastructure provides banks with the comfort of the current operation coupled with the opportunity to present digitally native propositions to specific customer segments.

Migration to a ‘digital-first’ infrastructure

A further benefit of this approach is realised in the migration. This migration can take place in sections, with an opportunity to fully scope risk and illustrate the key benefits to stakeholders through a series of milestones.

Whilst parallel operation of systems is a reality of any transformation, implementing iterative changes provides the combined advantage of realising the benefits earlier on in the process and breaking the risk profile into palatable pieces. Savings realised on the one side can be used to support construction on the other.

Launching a new product can become part of the transformation process, being delivered alongside the move to a digital-first operation. This is made possible by integrating the assembly and configuration of core and channel modules early in the transformation, focusing on building the functionality ahead of migration and modernisation of existing components. Thus, the bank can commence the long-term transformation journey and utilise the agility of the new solution for new products simultaneously.

Improved banking experience

Ultimately, customers may prefer a ‘digital-capable’ bank or building society as opposed to a purely digital one. The jury may be out on the future of the branch, but right now being able to play on all fronts could be a real differentiator as the world recovers from the pandemic. Whilst many of us are most likely to use internet banking, being able to visit a bank branch on an occasional basis would seem like a balanced approach. Providing choice and the ability to respond to the unexpected is crucial.

DXC is a trusted partner in banking transformations, working with more than 60 UK financial services organisations to help them select and move to using the ‘right trainers for the race ahead’. Our teams of experts understand the full spectrum of the banking ecosystem and can help to accelerate your product launch in this digital-first age.

To find out more, visit www.dxc.technology

The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.