The Digital Bank of the Future: Platforms, Technology and Culture

By and Charbel Safadi | 5 minute read | February 18, 2021

In the past, bank growth was fuelled by the growth of standalone products and services, each with its own set of systems, experiences, marketing, and operationsA client’s overall relationship with the bank was the sum of those individual product relationships. Similarly, behind the scenes, internal organizational structures existed as silos to support those products and services.  

Now, a radical shift is underway. In the digital bank of the future, client experiences are seamless from front to back. From a platform that the bank ownsthe bank can consume best-of-breed capabilities as a service, from partners, without lock in. These platforms share a few defining characteristics 

  • Includes services from inside and outside the organization, 
  • Uses real time data, 
  • Allows the bank of the future to serve clients as a segment of one.”

In short, the digital bank of the future puts customer experience first to achieve competitive advantage in the marketplace. 

At Think Summit 2020, I was joined by IBM’s Simon Kalechstein, Partner, IBM Services and Shahir Daya, Distinguished Engineer and CTO for a three-part conversation on the digital bank of the future. Our discussion centered around the three pillars of platforms, technology, and business culture, that, when operating together rather than in siloscreate a sustainable model for transformation across the organization. 

Tune into the Think Summit replay to watch all three topics discussed in detail.  Here are some highlights from our discussion on the bank of the future. 

Part 1Platforms of the future are your competitive advantage 

The big banks’ shift to platforms is driven by fierce competition from non-traditional players who are going after pieces of the banking value chain. To compete and innovate, the digital bank of the future must provide outstanding, end-to-end client experiences from a platform and ecosystem that the bank owns. This platform must move away from a siloed approach towards an end-to-end perspective. 

The platform of the future enables financial organizations to continue to leverage their existing investments while increasing their capacity and speed of innovation. Incremental modernization of legacy systems frees up resources to focus on innovation by introducing cloud-native technologies, microservices, and a data and AI-first approach. This is supported by the right talent and the right software engineering approaches.  

For example, by leveraging a shared payments platform on the cloud, the bank of the future can consume the combination of process, technology, controls, and operating model from the platform. There are other examples, like messaging, adjudication, content management, AI, or CRM, where the bank of the future can become the platform of choice for clients by becoming even more relevant in their daily lives.

Part 2: Modernizing your core will accelerate your business 

 How do you leverage your legacy systems while introducing cloudnative technology? Our point of view is anchored by what we call the digital core – where data is at the heart of every interaction a client has with a bank, regardless of channel. 

 Whether it is online banking, mobile banking, at the ATM or through the call centre, every interaction streams through this digital core and is captured in real time and flows through the digital core, enabling any process to tap into that event stream and act on it in near real time.  

This is gamechanging idea. The digital core consolidates trusted data from many systems of record in one place, democratizes the data, and makes it available in real-time for easy consumption by client experiences. Taking advantage of the vast amount of data in near real-time enables AI and machine learning use cases, including everything from personalization and predicting customer life events, to fraud and anti-money laundering detection.  

 Tune in to the replay to hear about clients who have successfully implemented the digital core. 

Part 3: Digital transformation falls flat without culture change 

Technology changes are necessary, but ultimately, they are just tools. When one part of an organization owns culture and another part of the organization owns the technology, infrastructure, platforms, how can we expect a seamless endto-end client experience?   

The competitive advantage for the bank of the future lies in the ability to fundamentally rethink the culture and structure from day one. It is not about their existing client base or the product setit’s about truly reinventing their organization to accommodate and support a model where they can bring together the whole organization, from marketing to product acquisition all the way through to services and back again. 

For a digital transformation culture, It is time to break apart the silos where each piece is owned by a different team. When teams are interconnected, they spend more time building better products and delivering new experiences, rather than navigating the organization.   

Here are some practical steps to help build a business culture that supports digital transformation:  

  • Bring dispersed groups together into cross-functional teams, including technology and business.  
  • Align the goals and objectives for all levels around customer outcomes and business results that matter.  
  • Collapse the value chain to streamline decision making and ensure the right people have the authority and accountability to streamline that decision making. 
  • Encourage “thinking differently versus business as usual.  

Putting Customer Experience First 

The digital bank of the future means embracing multiple, innovative technologies that underpin platforms and ecosystems – leading to a radical shift in business culture, structure, technology, and platform 

IBM believes the platform for the digital bank of the future will be driven by seven key success factors:  

  1. Serving real customer needs and delight them while doing it 
  2. Using the right data at the right time in real time for personalization and insight 
  3. Architecting for change by using best to breed capabilities, both inside and outside the organization  
  4. Using AI for enhanced decision making, offers, servicing, and more 
  5. Bringing the business, the development team, the testers, the risk team together to design and deliver what clients really want 
  6. Reinvent the workforce with new skills 
  7. Winning trust and security as the anchor for moving forward  

Leading banks are starting to create the platform, environment, culture and governance through which they can engage and innovate for the benefit of customers, ecosystem partners, and themselves. The bank of the future is within our grasp. 

Charbel Safadi, Senior Partner, Financial Services, IBM Canada: