The Full Potential of Core Banking Transformation Starts and Ends with the Customer, not the Tech

By Antony Jenkins

The global banking landscape has seen an unprecedented explosion of user-friendly fintech firms, and now big tech firms, entering the market such as Apple and Amazon, putting traditional banks under pressure to adapt to remain competitive.

Banks have come a long way in developing their front end digital and mobile banking platforms. But those capabilities have become table stakes for all financial institutions. Though digital upgrades make tasks easier for consumers, they are no longer differentiators. 

Spending transformation budgets on the surface items like a set of digital tools or channels is not true transformation. A digital banking app still does not do all the things a customer wants it to do. 

To truly provide a customer with good experience, banks must offer the correct tools, products, services, and advice customers need, when they need it in real-time, and have the agility to pivot quickly as needs or the market changes. To do this properly requires a radically different way of organising your business.

This is also a mindset shift – the realisation that true banking transformation is not an IT issue but a strategic issue for banks.

Banks that stop thinking in terms of IT upgrades and start rethinking how they can make customers’ financial lives easier will be better placed to complete on a level playing field with neobanks and big tech. 

Ultimately banks are not technology businesses, they are data businesses.  

Banks already have all the data they need to really get to grips with delivering more personalised experiences and customised solutions that fit their customer’s current financial state.

It is about reorganising their technology estate to better arrange and analyse data efficiently to inform product development, marketing and customer retention and acquisition activities that customers demand.

Not tackling everything at once

Banking transformation on this scale is challenging to put into motion. 

Whilst banks are focused on the strategy, few have focused on the constraints they are working with preventing true transformation to really get underway. 

For instance, incumbent banks face the ultimate battle of age. All of them have accumulated a highly complex technology estate over 20 or 30 years, with various degrees of success and a fair amount of sunk costs. 

Over time, as tech has evolved, these legacy systems have been gradually and methodically integrated with more recently developed IT systems to a point where data is in multiple silos and there is no single view of the customer.

Added to this are a plethora of bank ‘build’ projects in various stages of progress such as creating an AI engine or building a new core banking system. 

With the sheer number of constraints mounting, it is no wonder that banks are slow at progressing true transformation and opt instead to add more tools on top of an ageing infrastructure.

Ultimately, banks cannot tackle everything at once. Building complex tech stacks or infrastructure estates is not why a bank is in business. Banks are there to serve and stay relevant to their customers. Maintaining a future proof set of capabilities should be someone else’s primary function and not managed inside the bank, taking up precious resources.

Removing the noise and complexity from what is essentially ‘utility’ at a lower cost base outside of the bank as services that are bought, allows banks to really focus on the market that they serve or the market/s they want to grow into – including what they need to do to differentiate in those markets to stay competitive, grow and expand. 

Moreover, the technology now exists to deliver this transformation in a series of tranches, massively reducing cost, risk and time to value.

In an evolving market that is growing in sophistication, banks that continue to try and manage it all themselves will see a slow decline because the customer is not at the core of their business.

About the Author

Antony JenkinsAntony Jenkins is the CEO and Founder of 10x Banking. Antony has had an extensive career in banking – including a tenure as Barclays’ chief exec – and found that digital transformation was significantly lacking in the banking world and that products were prioritised over customers. He founded 10x to radically transform the banking industry and provide banks with the tools he wished he’d had to better serve customers.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.