Most often Banks are advised that in order to digitally transform their business they need to change their legacy core platforms. While there is merit to upgrading to a modern real-time core banking platform, it often does not do anything to change the interactions of the Banks customers – in meeting them “where they are at”.
The path to winning the Customer lies with Digital Channels.
Changing Core Legacy Platforms are mostly inwardly focused, streamlining banks internal processes to better manage risk, provide straight-through processing and drive efficiency. Financial institutions usually have a long-term vision for such projects given the hefty investment required.The cost of core transformation initiatives is often tens, if not hundreds, of millions of dollars (example Commonwealth Bank of Australia – over $1bn), let alone the organizational disruption that they bring.
Not only are Core transformations costly, (and almost always exceed budgets), but many of these initiatives do not realize the intended benefits – or worse still, fail:
- Core transformations require a huge investment in time, first the business case and budget needs to be approved, and the cross functional team appointed for the project.
- The process begins with the selection process of RFI to RFP, to vendor shortlist, to due diligence, site visits, contract negotiations – all of which usually takes in the range of 9-15 months.
- Once the contracts are signed, there is usually a lag of about six weeks to get the project team on the ground and to start the project. The projects are complex, and with good reason, and a typical core implementation is in the range of 15 -36 months (often longer) + a period of post live support/stabilization – and then a few months of adjustment to the new way of doing things… so the timeframe is in region of around 3-4 years, more often longer.
- None of this is focused on the banks customer
Digital Channel projects:
- Provide quick time to value – short implementation with immediate impact, and return on investment;
- Improve customer satisfaction and growth;
- Drive efficiency, improve points of service, increase share of wallet and achieve quicker time to market for new product offerings;
- Most importantly, delight your customers.
Banks too often make the mistake of not being outwardly focused – and not prioritizing the customer or their journey – which is the real reason for digital transformation.
Banks need to walk in their customers’ shoes and realize that digital transformation is about meeting your customers “where they are at”. Today this means, on-device, on-demand, available anytime, and anywhere. This is particularly important in the consumer and SME customers (tomorrow’s Commercial and Corporate customers), and it is where Digital Channels are imperative to the customer experience and convenience.
Irrespective of the core back end, without flexible and relevant digital channel solutions – the customer engagement is unlikely to meet expectations of this convenience-driven world to which we are accustomed.