January 11, 2018 | Written by: Richard Shakespeare
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Let us pose a question: How does a financial institution cut costs today and manage compliance, while still spending on the future?
One answer: Move to the cloud.
This paradox is explored as we discuss how new technology architecture can drive value for financial services companies as well as how to map the transformation journey to extract the most value in this episode of the Boardroom Advisory Series. Watch the full episode here.
In the series, we discuss creating efficiencies to help pay for innovations down the line. This is a critical conversation for the board at financial services institutions.
It’s not uncommon for us to see clients in the financial services sector struggle under the weight of legacy technology. While the goals are to reduce costs and invest in technology to open new revenue opportunities, the complicating factor is regulation. Financial services firms are under significant pressure to upgrade core business systems. With legacy infrastructure, it means most of the IT costs are eaten up by trying to maintain compliance and running the business, rather than innovation.
However, as discussed in the episode, we’re seeing the financial services firms that have moved to the cloud, change that cost structure. Moving to the cloud is a catalyst for CEO’s and their teams to fundamentally change the cost structures in their business. In the process of migrating, financial institutions have the opportunity to re-shape their businesses. Reversing a trend, where 70% or more of expenditure is consumed in maintaining regulatory compliance and running existing products, is extremely challenging. With boardroom support, a broad move to cloud delivered capabilities can open the way to transformed business agility and exploitation of new partnerships with traditional organization and fin-techs. This allows taking advantage of regulatory frameworks such as open banking and an increasingly granular view of customer segmentation.
Institutions who have embraced these changes are seeing success in the form of increased customer NPS, reduced churn, significant positive shifts in cost-to-income ratios and accelerating revenue growth in high margin products.
Watch the full series here.