The journey to modernize technology within financial services firms is never straightforward, we take a look at some of the obstacles.
As we listen to retail banking leaders, the importance of two imperatives stands out: moving to the cloud and delivering better digital experiences to customers. The cloud’s elasticity and efficiency make it a perfect platform for digital experience innovation. Yet, those two imperatives can be at odds. Moving core banking systems to the cloud takes time – typically years for large-scale migrations. This can frustrate banks that want to launch new experiences in the cloud or risk losing ground to the competition.
Does that mean you have to separate cloud adoption from experience innovation? No. By embracing a collaborative approach, it’s possible to move your critical apps to the cloud while also increasing the pace of digital innovation.
Customers demand better digital experiences now
Why is it so important to bring velocity to digital experience building? Banks like yours are adapting to the digital-first world. That means ensuring that customers have smooth digital experiences through all channels. Branches matter less than ever. Many customers seldom – or never – visit a branch. While in-person experiences still matter, they aren’t the differentiator that they once were. Today, banks differentiate with digital.
A look at the industry shows that banks are struggling to deliver consistent experiences across digital touchpoints – much less differentiate. A recent survey from Celent reports that a new customer can fully open an account online at 74% of banks surveyed. But only 41% of those banks empower new customers to fully open an account via mobile. And only at 54% of banks can existing customers apply for a new product via online banking. Those numbers point to the difficulty of making every aspect of banking digital.
Customers frequently don’t like the digital experiences that banks offer. Take digital account opening as an example. According to Celent, zero percent of banks have an application completion rate of over 80%. A mere 25% have completion rates of over 60%, and 25% report dismal rates of 20% or less. That’s a problem that has to be addressed right away with a better digital account opening experience.
When right away means months or years
Backend legacy systems don’t readily support the digital front end that customers expect. Why? The details vary by bank, but we’ve encountered common hurdles. Core banking systems are complex. Plus, they’ve evolved in ways that have added thick layers of complexity through the years – and for good reason. Business users have demanded new features. Regulators have required new safeguards. New layers of complexity have developed. With them, organizational silos have formed that add workflow challenges. When embarking on a cloud modernization journey, it is these system complexities and organizational hurdles that must be addressed.