The Pivotal Shift to Tech-Driven Success: The time for talk has passed; now is the time to act warns Matt Cox, General Manager EMEA, FICO
Matt Cox
In the ever-evolving financial world, a pivotal shift has emerged with a surge of robust, tech-driven transformation within the banking sector. Discussions are turning into actions, as IT leaders seize the opportunity.
In the past, institutions purchased different solutions for different challenges and different areas of the business. This approach inevitably led to a buildup of technical debt resulting from the use of duplicate technologies, decision engines, case managers, workflow tools, and others. Now we’re seeing a shift in strategy. IT leaders are beginning to understand the necessity of unlocking business growth through a transformative technological approach.
This tech-centred drive to business growth is a testament to the increasing influence of technology teams within the industry. Increasingly, they are pushing for enterprise-level, platform software coupled with cloud technology. As businesses move deeper into the digital age, the need for more flexibility, faster reactions to market trends, and a sustainable growth model are behind this push.
Once viewed as simply growth enablers, these technical teams are now seen as critical value creators. A key factor propelling this wave of transformation is the reduction of costs. By shunning the siloed strategy that defined previous years and embracing more efficient and streamlined processes, banks are combatting decades of accrued inefficiencies.
But this change is not just about costs. Regulatory changes, like the Consumer Duty in the UK which was brought in last year, are compelling businesses to overhaul their technological systems.
From another perspective, the banking industry has discussed using AI and machine learning for real-time decision-making for years. They are now starting to create a common data layer and a unified analytics execution capability, both of which are crucial to managing the flow and impact of AI’s insights into the decision-making process. This trend is not exclusive to banking. Industries like telecommunications, insurance, and automotive are experimenting with similar ideas.
While the move to platforms and the cloud is a global one, the progress is uneven. European financial institutions are often lagging their peers in the UK, the US, Brazil, Canada, and parts of Asia. This disparity sets the stage for a predicted massive tech transformation surge in Europe for 2024.
The platform strategy shift has tangible results, with banks managing to reduce project delivery timeframes drastically. This creates benefits for the banks themselves, in terms of cost, staff and competitiveness, while customers start experiencing faster, more personalized service. A recent Gartner survey stresses the importance of this customer-centric approach, revealing that banks with outdated systems are losing one in three customers due to their inability to offer personalized services.
In 2024, the risk will be for those banks falling behind due to inaction, while those just starting the transformative journey and those who that are further ahead use better customer service and business agility as a competitive differentiator. This should serve as a warning to lagging banks of the heavy price if they fail to innovate. The time for talk has passed; now is the time to act.
