Digital transformation is no longer a choice, but a banking business imperative.
Most banks have known for quite some time that they need to digitize to remain competitive. And most have begun their digital transformations. However, each organization has taken a different path to becoming a truly digital organization, and some are much farther along than others.
Various factors complicate the digital journey: proliferating channels, shifting customer demands and increasing competition from both traditional and non-traditional players. Banks must innovate and speed the right products to market and comply with increasing regulation. At the same time, they must find efficiencies and cut costs wherever possible.
Banks must optimize their digital transformations to ensure they’re focusing their efforts and resources on the projects that will add the most value to their organizations.
Here are the four key areas of focus that will help banks clarify their priorities and top concerns as they move forward with their digital transformation.
1 The Overall Game Plan
Every transformation needs a game plan. Without a detailed plan, it’s difficult for banks to know how to manage and run the digital transformation, to measure success and to identify the projects that will provide real value.
Even within a single bank, the term “digital” can mean one of dozens of different things. Given these varying interpretations, there could be 30 different projects that are classified as digital efforts.
It makes sense for financial firms to create a digital program office that includes governance, objectives and priorities for their digital efforts and plans that drive the projects to successful conclusion. If banks fail to create a roadmap and determine digital priorities, they will wind up throwing cash and resources at dozens of different projects that may or may not provide value to the organization.
The majority of banking institutions face massive infrastructure costs, and it’s essential that they find a way to lower these expenses, both in terms of servers and hardware and how they consume their infrastructure.
Even if they don’t do much else, banks can drive down costs and add value by evolving more and more of their infrastructure to Infrastructure-as-a-Service (IaaS). Moving to IaaS saves on up-front hardware and infrastructure costs by changing from a Capex to an Opex model. It also increases agility and accessibility while simplifying capacity management.
While banks can quickly gain many benefits from evolving their infrastructure to IaaS, they can see more advantages by modernizing and moving their applications into the as-a-service world as well.
However, it would be difficult – if not impossible – for banks to simply modernize all their custom applications. An Application-as-a-Service (aPaas) approach offers environments for development and deployment for application services.
With a consumption model similar to an IaaS approach, aPaaS extends the life of mission-critical applications, moves to consumption-based expense, decreases application TCO and frees up both the IT budget and staff resources for innovation.
4 Business processes
As banks create a game plan and address their infrastructure and applications, they will likely see that they must address their operations in addition to looking at their IT infrastructure and applications.
If there are operational areas that operate at a fixed cost but do not provide value differentiation, banks can either outsource these standardized business processes or, better yet, move these processes into a consumption-based model, Business Process-as-a-Service (BPaaS).
An outside partner can bring a fresh perspective and sensible approach to transformation. CSC has recently partnered with PricewaterhouseCoopers (PwC) to help financial institutions create a roadmap that will help organizations navigate the digital transformation journey. You can find out more about that partnership here.