Implementing new software across an entire enterprise is often a long, difficult, and expensive process. For this reason, many companies put off making major changes to their technological infrastructure for as long as possible, even if it means sacrificing operational efficiency or opportunities for growth. Executives are often hyperaware that digitization initiatives can cost their firms dearly in terms of time and resources if the new system fails to work as it should.
Contemporary banking customers, however, are beginning to expect much more than legacy banks have the technological capacity to provide. They demand seamless, omnichannel, and constantly accessible banking services, and they won’t hesitate to shift their loyalties to emerging providers that seem better-equipped to provide them with these experiences. Fintech companies, non-traditional pure-digital banks, and other new competitors are poised to siphon these customers away from traditional banks.
Modernization is now all but imperative for banks that wish to survive in this evolving business environment. At this critical juncture, your bank can start down the path of digital transformation by embracing a modern core banking system. While the process of adopting and implementing such a system won’t come without challenges, bank leadership can navigate these effectively by bearing the following in mind:
Executive Endorsement Is Necessary
Enterprise-wide software changes are meant to resolve major issues and often demand large investments. Software change initiatives thus require support from the organization’s uppermost levels, whether these refer to the board of directors, the CEO, or both. At the banks that have historically succeeded most at introducing software changes, executives have counted implementation among their major priorities. These executives have also been able to rally full organizational participation.
Leaders at banks, credit unions, and other financial institutions can expedite new software implementation by naming a strong executive sponsor. This individual’s primary responsibility will be to ensure that company resources are funneled appropriately toward setting up the necessary technology and training staff to operate it. A drawn-out, constantly deferred software implementation process poses considerable risk to any organization’s operations. Full organizational engagement backed by dedicated executive support reduces this risk significantly.
Status Quo and End Goals Must Be Clearly Defined
To successfully implement new core software, banks must first identify and study the issues the system is meant to address. If a bank has no clear sense of what their goals and their end-state architecture should be, they risk starting an irrelevant project or choosing an inappropriate tech provider. Defining pressing problems and setting clear goals makes it easier for banks to evaluate potential solutions and choose the right partners.
Many financial institutions also fall into the trap of automating their current procedures as is and assuming this will fix any inefficiencies they currently experience. Successful banks, however, will look at software change initiatives as fruitful opportunities to reevaluate and possibly modify incumbent processes. Tech implementation periods often mark a good time to identify current pain points and efficiency gaps, as well as potential opportunities for new or increased revenue.
Functionality and Flexibility Are Equally Important
Bank leaders must be aware that transforming their institution’s core systems successfully necessitates considering the principles of flexibility and functionality equally. Banks first need to make sure that they have all the components and functionalities necessary to create the products and services they want to present to modern customers. Secondly, and equally importantly, they need the business agility to provide the superior service that will set them apart from other competing institutions.
Digital Transformation and Cloud Strategy Must Match
Most banks seeking to transform their core systems will be interested in migrating a large part of their operations to the cloud. Even banks in jurisdictions without a strong public cloud footprint are exploring private, hybrid, or non-regional clouds. However, operating a business from the cloud is about more than just making technological changes. Successful cloud adoption entails reimagining a bank’s entire business model going forward into the future.
Running cloud-based systems comes with its own set of unique considerations, including wh platform technologies to implement, business continuity issues, the risks involved, and scaling considerations. An enterprise’s cloud strategy should be designed to supplement and work in harmony with its digital transformation strategy rather than the other way around. Decisions like the choice between public and private clouds, and when to use each, should be made with the organization’s overall modernization goals in mind.
User-Centricity Should Be a Priority
It’s impossible to overstate the importance of frictionless and user-friendly systems for successful core banking modernization. This drive toward greater user-centricity not only covers customer-facing interfaces but should be applied with equal attention to bank personnel and other internal users. For example, banks must implement software systems that allow users to view and complete processes on a single unified screen, rather than requiring them to open multiple applications.
Banks aiming to modernize their core systems can now choose from an abundance of digital software solutions. To implement their chosen software effectively, banks must consider their needs, develop a focused digital transformation strategy, and encourage organization-wide participation during implementation. Successful software changes will, in turn, enable them to meet evolving customer expectations and outpace competitors.