Jul 17 2020

Ready or Not, Financial Services Must Embrace Digital

The new normal requires digital transformation to be successful, and financial institutions must keep up.

Digital transformation became front of mind for organizations across industries the moment employees had to begin working remotely. Some already had the infrastructure in place to enable working from home at such a large scale, but many didn’t. Some businesses had the tools, but not the capacity; others that hadn’t started or were in the very early stages of their digital transformation journeys were caught flat-footed.

Many in the financial services sector fell into the latter category. The industry can often be particularly reluctant to change, with legacy systems built to protect customers and comply with government regulations. 

“When you look at the financial services industry in general, one of our biggest challenges, quite frankly, is legacy technology,” said Melanie Frank, vice president of technology at Capital One. “Older technologies tend to rely on infrequent batch processing, and they’re just really unable to provide our customers with those real-time and intelligent experiences they expect.”

At Google Cloud Next ’20: OnAir, the virtual edition of the company’s annual conference, Frank and other financial industry experts discussed the state of the sector when it comes to digital transformation, and how technology can help financial institutions not only deliver exceptional customer experiences but also streamline operations and reduce error. 

How Capital One’s Early Investment Paid Off

When the pandemic began and banks had to adjust to a remote workforce and fewer in-person customers, it was a harsh transition. Many members of the industry were stuck in legacy systems that weren’t conducive to good digital customer experiences or a positive remote work environment for employees.

“We’ve actually been on a seven-year digital transformation journey that comprehensively reimagined our talent, our culture, our work and the technology infrastructure behind it,” Frank said.

So, when the changes began, Capital One was ready.

“We’ve had a vision for quite some time to enable our people to work from anywhere, on any device, at any time,” Frank said. “Investments we had made in our platforms, in our VPN capabilities, in audio and videoconferencing solutions and in our collaboration suite really paid off.”

Implementing this kind of transformation isn’t easy. It can take a long time to unlearn the muscle memory of legacy systems, Frank says, so that must be acknowledged before tackling new technology.

“Our biggest learning is that you can’t over-invest in change management,” she said.

MORE FROM BIZTECH: The bank branch reopening checklist.

How IT can Enable a Culture of Innovation

Company culture often is built from the top down. It’s imperative that financial institutions have leaders at the executive level who respect the value of digital transformation in order for it to be successful.  

“In a fast-moving world, innovation is central to everything that we do,” said Sarthak Pattanaik, CIO at BNY Mellon Government Securities Services Corp, at the conference. “We have a culture of being nimble, encouraging curiosity, diversity of thoughts and experimentation.”

“It’s critical that we build a modern, resilient and digital-first platform,” he said.

While the cloud can be an important part of digital transformation, it doesn’t necessarily mean that all of an organization’s infrastructure must be cloud-based. At BNY Mellon, the organization uses a mix of cloud and on-premises environments to innovate while maintaining strong service.

“Over the last couple of years, we’ve made significant investments in modernizing our transaction platforms, running in a best-in-class, secure, on-prem infrastructure,” said Pattanaik. “In parallel, we are investing in cloud technology as the business of our innovation engine. The cloud platform allows us to focus our digital capital on experimentation. We can then leverage the tremendous amount of broad, granular and historical data to quickly test our business ideas.”

Whether financial institutions are diving entirely into the cloud or finding a balance that serves their audience, organizations can no longer afford to delay digital transformation. With the right company culture and plan, they can move successfully into the next chapter of work.

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