Banks face challenges on multiple fronts these days – from keeping up with moving-target customer expectations to fulfilling regulatory compliance demands, from securing client data to fending off intrepid new competitors. Today’s customers seek financial services (FS) ease, accessibility, and top-notch customer service. So, for firms to stay relevant, they must be focused and efficient.
Why, then, do so many banks still support traditional siloed operations?
Whether the result of long-time accounting or reporting rules, ingrained culture, or merely comfortable familiarity, the vertical nature of silos simply inhibit organizational potential. When information doesn’t flow freely between departments, it isn’t digested and acted upon quickly and effectively. Multiple departments and all the best minds could be working simultaneously on overlapping data. However, without transparency and collaboration, achieving quick and effective results is atypical.
When communication doesn’t flow freely between bank departments, customer experience often takes a hit because customers are forced to explain their history during multiple interactions. Moreover, poor customer satisfaction erodes loyalty and can spur consideration of a more frictionless environment as offered by FinTech providers.
Siloed structure also leads to unproductive interdepartmental rivalries. Employees who are limited to their respective departments don’t grasp the bigger picture, and the bank’s ability to cooperate across organizational lines is squelched, thereby increasing costs and decreasing the organization’s effectiveness in selling and serving current and potential customers. A bank will underperform versus newcomers that are moving in sync to cross-sell and promote a consistent message.
A centralized flow of data between teams makes internal processes and platforms cohesive. Similarly, customer interaction needs to reside under a single umbrella. The legacy application landscape is often highly segmented with each business unit having its own siloed application.
More than 54% of banking executives interviewed as part of the World Retail Banking Report 2018 said that overhauling legacy architecture and building digital business processes were prioritized to coach employee acceptance of digital culture and to promote innovation. What’s more, nearly 42% of interviewees said that silo removal was a part of their strategy to encourage innovation.
When bank employees have a 360-degree view of customer data, customer experience improves on all fronts. Customer expectations are evolving and require banks to understand and respond to needs irrespective of the channel of interaction. With a streamlined IT infrastructure, banks will be able to confidently engage with customers and provide the expected offering at the right time.
Multinational DBS has undergone a significant and successful transformational journey. The Singapore-based bank acknowledged the competition from agile startups was heating up and determined to foster a cohesive culture by creating central teams focused on customer journeys and innovation.
As the banking sector evolves, customer insights collected via digital channels will become more critical. Digital engagement opens opportunities for banks to understand their customers at a personal level and to feed insights into their central systems. Banks that distinguish themselves around customer experience as the result of a central decision-making system are bound for success.
As incumbents remained bogged down by legacy systems, FinTechs and BigTechs are disrupting the FS sector by delivering excellent customer experience and ever-evolving product portfolios. They are creating an ecosystem build on collaboration as first business driver.
A collaborative mindset will help banks to become more efficient, productive, and agile.
British digital banking unicorn Monzo has taken collaboration with FinTechs to the next level using the AWS Cloud. Calling itself a bank that “lives on your smartphone,” Monzo, which runs more than 400 banking microservices on Amazon Web Services, grew to 1.7 million users since its 2015 launch and today has US$1.38 billion in transactions.
The open banking ecosystem of the future will feature emergent new roles that challenge traditional banking assumptions. To retain relevance, the most successful banks will assume a role that aligns best with their differentiating capabilities and external operating environment.
The banking ecosystem of the future will feature new roles
Source: Capgemini Financial Services Analysis, 2019; World FinTech Report 2019
With ecosystem partnerships being recognized and valued, Open Banking will eventually leapfrog to a future-state Open X phase that features standardized APIs, insights from customer data, and effective collaboration. Open X will drive data-use excellence that fosters a seamless exchange of resources, improved experience for customers, and expedited product innovation.
Structured collaboration will be the key to smashing the silos as well as mitigating the challenges of tomorrow.
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 Capgemini, World Retail Banking Report 2018, September 20, 2018, https://worldretailbankingreport.com
 AWS: Monzo Case Study, “How Monzo built a digital bank on AWS for over 500,000 customers,” https://aws.amazon.com/solutions/case-studies/monzo, accessed August 2019.