How to lead in digitized banking: a new platform

The banking playing field is changing rapidly. Banks need to comply with high-impact regulatory changes like PSD2, fight off (non-bank) competition and consistently increase their cost income ratio. At the same time, great services like Netflix, Waze and Spotify have seriously raised the bar for digital customer expectations when it comes to convenience and quality. Banks struggle to keep up with this trend, which will only intensify. It is evident that only by achieving a digital transformation strategy fast, banks will gain and retain the loyalty of hyper-connected consumers. Banks are stalling, what is the problem here?

The two-speed IT dilemma (between systems of interaction and systems of transaction) prevents banks to foster the required fundamental and continuous change to support the new digital engagement models. It makes banking legacy systems suffer under the load of surging mobile use: all interactions hit the back-end systems, but only a percentage result in transactions. To deliver the compelling services that customers expect, banks need to make their digital offering more customer centric: context-aware, data-driven and personalized. However, high value data that is locked in the legacy systems remains unexploited and services are often still fragmented and silo-based. But these are known facts, repeated over and over again. Now, how to solve this?

A fundamental change in the architecture of a bank is imminent, but replacing systems has become too costly and time consuming. Hence, banks need a next generation solution that allows to remaster and innovate their current digital offering while avoiding impact on the reliable transactional back end systems. By implementing an overlay platform that integrates front-end channels and open API-eco systems to legacy environments but also facilitates the rapid creation of rich and innovative digital services, banks could gain the key competitive edge.
Such a platform should be more than the next API-gateway or souped-up integration layer. Typically, API-gateways don’t solve the integration part and integration layers are not built to manage the interactions nor the resulting contextual data. This creates an opportunity for a solution that delivers omni-channel APIs, solves the integration issue and can valorize (customer) data. But what are the key ingredients?

System integration, to lift operational data for example, remains one of the most difficult hurdles. So it’s a matter of avoiding, simplifying and/or accelerating. Avoidance can be achieved by smart-caching relevant data (that doesn’t need to be real time) to limit calls to back-end systems. Simplification: a large piece of the current digitization scope can be covered by leaving the existing middleware intact and merely consuming available integration services. This can be done by leveraging on new data management techniques and systems that avoid the need to impose yet another data model. Acceleration can be achieved by creating a delivery framework that unifies the full integration workflow (from design, mapping, code generation and documentation to test case creation and execution).

Digital customer dialogue needs to become far more responsive than what more traditional business process management tools can offer. By orchestrating them in event driven journeys, they can underpin truly reactive, personalized and intelligent interactions. Processing context aware events from the channels and blending them with real time input from customer intelligence, risk, compliance or other systems, are some of the evident possibilities.
Banks often lack the capacity to actively manage consent and 3rd parties (required for e.g. PSD2). Furthermore, interaction with prospects is often very limited since they are not yet known in any back-end system. The digital overlay can be the strategic placeholder to solve these short-comings.

Obviously, a new platform needs to adhere to the stringent non-functional requirements of banks. These NFR’s need to be built into the platform structurally and by design to minimize their footprint and future proof. A reliable, scalable, fault-tolerant system that offers guaranteed exactly once processing can’t be a derivative of a multi-industry solution, it needs to be built for the financial industry specifically, not added afterwards.

Achieving a banking platform that is event driven, data intensive and highly flexible requires a new kind of technology stack. In-memory data and computing grids and containerization deliver the required underlying technology to form the basis for a truly micro-services based digital banking solution.

But it all boils down to simplicity. Being able to transform banking complexity into nimble small applications that offer compelling features with a great ease of use is what will beat competition eventually.