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3 Paths to Transform Your Bank

Posted by Anna Mielczarek on 11-Sep-2018 07:30:00

Making a decision of deploying Digital Transformation into your business is just the first step of the journey, and in most cases - the easiest. Then, you must decide how you are going to transform your organisation, and the right path to do it is a subject of great debate for many businesses. Should you completely overhaul your company and create a distinct digital entity? Or should you focus on front end changes, which are the most visible to your customers?

                    source: MarshallStrategy

What is the best way for banks and financial institutions to implement Digital Transformation? In its white paper, PwC, global consulting firm, proposes 3 different approaches for banks on how to embrace Digital Transformation.  

But before that, author of the white paper, Julien Courbe emphasises the importance of determining how becoming digital fits into overall strategy and needs of your bank.  He suggests that it can be done by asking 3 relatively simple questions:

  1. What do we want to be known for?
  2. Which consumer segments are we targeting?
  3. What are our core capabilities and points of differentiation, and how will a digital strategy strengthen them?

 Only by answering to these questions can you decide, which Digital Transformation strategy is just right for your bank.

 So, let’s focus on these 3 strategies aimed at transforming your bank.

1. Front End Only: A Cosmetic Fix

It is the simplest approach focusing on modifying the front end, that is the primary ways of customer’s interaction with a bank such as website or mobile app, while ignoring the back end. All these changes can be simply described as a cosmetic fix as the bank will focus on designing mobile app and web interface, which should be more appealing to customers. Certainly, it’s the easiest and most cost-effective approach, if an organisation needs a quick win. But apart from that, it won’t do much in terms of transforming your business digitally.

However, it is useful if your bank is struggling with serious customer-facing issues as your customers will start to perceive the bank as more digital.  Nonetheless in reality, the bank remains limited in what it can actually deliver. Of course, customers might be able to apply for credit cards using the mobile app, and that, to a certain extent, will improve the overall customer experience bank provides. But without integration of back end systems and no fundamental change to operating model, there won’t be that much difference from what customers are already used to. In other words, as stated in PwC report:

The front end promises what the back end can’t deliver.

Although, when first implemented, fixing the front end is likely to help you reduce customer churn, it will not last, if the back end can’t meet customers’ expectations.


What does it mean for your bank? Digitising the front end, sooner or later will require making additional investments. Otherwise, it can bring you more struggles than solutions. However, if you’re seriously thinking about transforming your bank – it’s a good start, especially when you’re facing financial or organisational constrains.


2. Wrap and Digitise: Gradual Replacement 

With this approach, you change the front end, and go one step further, focusing on gradual replacement of legacy infrastructure with new digital solutions, while also integrating the middle and back offices along the way.

PwC gives an example of one bank, which used application program interfaces (APIs) in order to integrate data across products groups and functions. In turn, it gave employees a 360- degree view of the customer and set the stage for modular, “plug and play” capabilities. Apart from that, this integration layer enabled product lines or system upgrades to be quickly connected to larger network. With data integrated across the whole organisation, company can become more agile. Instead of multiple sites for banking, lending and cards, customers can have access to all of their accounts with a single sign-on. Customers will also be able to start an application on their mobile device and transition seamlessly to a desktop. Talking about employees, they can quickly and effectively turn data into real insights, what will make customer interactions more tailored.

Unfortunately, ‘wrap and digitise’ focuses on individual improvements and it can take some time before the full scope of the bank’s processes has been overhauled.


What does it mean for your bank? This approach improves customer experience more than the front end only – that’s for sure. But it is a really long process and you need to be prepared for that. If you’re willing to take more gradual approach, you can test out the individual IT improvements and show benefits quickly when they go live. As cost are more spread out, this approach is definitely more affordable for your bank.


3. Go Digital Native: All In 

Some banks choose to create a digital native bank that uses a fully digital customer interface as well as back end. The two biggest benefits of this strategy are:

  1. Ability to adapt quickly to change.
  2. Significant cost savings.

With this strategy, the management team typically starts over by defining the ‘minimally viable bank’ (MVB), that will offer just a handful of products. PwC provides us with example of retail bank, focusing only on deposits, payments and/or lending. Many financial institutions pursuing this approach have decided to create an entirely new digital arm, in other words, a separate arm with its own consumer-facing brand, that is likely to eventually overtake the legacy brand. As mentioned earlier, reducing costs is one of the reason why banks should go digital native. As stated by PwC, branch transactions cost roughly $4 each, while online and mobile transactions cost $0.09 and $0.19, respectively. But apart from that, becoming digital native makes banks much more agile. It allows them to adapt to rapidly changing tastes and preferences of their customers. By going digital, financial institutions can test, learn and when necessary – fail fast. Utilising modern infrastructure, banks can quickly and easy tailor products or services they offer, for example new advisory services or accounts types, as well as change prices for their offerings when suitable.


What does it mean for your bank? Many financial institutions think it’s costly and time consuming to launch a fully digital bank, but it doesn’t have to be. Thanks to cloud technology, it’s now possible to launch a digital native bank in few months and at far less expense than ever before. And you should be aware that the options aren’t mutually exclusive - if you want, you can, for example, combine this with the 'wrap and digitise' approach.




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B60 is a global leader in delivering Digital Transformation and Technology Development and works with ambitious firms in the U.K. Europe and USA across multiple sectors. Since 2012 B60 has been embracing digital change by utilising our unique operating models, frameworks and methodologies to truly drive innovation and change from within our clients businesses.

If you’d like to discuss with one of our experts on how you could successfully deploy Digital Transformation and Technology Development in your business drop us an email at hello@b60apps.co.uk or alternatively call us on 0121 405 0270.


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Topics: Finance, Digital Transformation, Success, Change and Innovation, Leadership