Business agility, adaptability, and a drive towards personalization at a one-to-one level are all prerequisites for modern-day banking. However, costly, and complicated legacy systems have firmly held companies back from meeting these users’ needs and clearly established a need to modernize their core banking systems.

Progressive change is key

Embarking on digital transformation can be complex, costly, and risky. Instead of instantly employing migration in full force, adopting a more progressive approach towards core modernization simplifies an otherwise overwhelming process of a big and immediate change.

Progressive transformation via greenfield approaches and products is proliferating for good reason, as incumbent banks look for ways to remain nimble while undergoing digital transformation. With contextualization, banks can effectively map new offerings and products to ever-changing market demand, while also maintaining the budgets and processes for daily businesses.

Not to mention, the less disruptive nature of progressive transformation ensures financial institutions will find it less of a strain on budgets when it comes to experimenting more with technology to unlock customer value. Core modernization then becomes a purposeful and directed, customer-led process that produces the desired results.

Driving personalization with data and insights

Almost every institution is undergoing digital transformation to some extent and to complicate matters, cross-industry boundaries are increasingly becoming blurred to cater multiple services to today’s hyper-personalized consumers.

It, therefore, stands to reason that delivering a personalized customer journey should be a key objective for financial institutions that are serious about digital transformation. In the 2022 Publicis Sapient Global Banking Benchmark Study, which surveyed 1,000 senior banking leaders, a notable 36 percent are combining customer data across different systems to obtain a richer understanding of their customers and their relationships and a similar percentage is using this to design new offerings (35%) and to personalize customer journeys (33%).

Getting to know one’s consumer thoroughly impacts the extent to which a financial institution stands apart from the rest. Firms need to set a clear and short timeline to leverage their extensive databases and extract a curated set of data that sheds light on consumers’ most pressing needs.

This can then be streamlined into actionable insights to enable employees to deliver greater value, whether the relationship manager who aims to deliver the right, contextualized services to small and medium enterprises (SMEs) within their local landscapes, or service staff who can share better insights and recommendations with individual customers every day.

The pitfalls to implementation

A key challenge with the concept of core modernization is that it is usually not easily embraced or understood fully by the individual employee. A recent survey found that many companies’ employees do not see the impact on revenue or costs that they expected. How then can leaders work to drive transformation from the inside out?

First, by empowering employees to understand and own digitalization – Instead of framing it vaguely or as “compulsory staff trainings,” the digital transformation process can be endorsed and championed internally if it is thoroughly explained, and its benefits illustrated in full.

Next, make migration minimal – Change is never easy, but it can be made easier if targeted and minimized as needed. For instance, utilizing data insights can help streamline the migration process to ensure the extent of migration and then develops impactful, desired customer propositions.

Making the decision on whether to buy or to build is also crucial. Deciding early on how many points solutions to adopt from the FinTech providers, like platforms as a service (SaaS), can help make your design much cleaner, more flexible to adapt to unforeseen changes, and better ensures its integrity in the long run, during implementation.

Towards a coreless future

Transforming services from their core may seem like a mammoth task to many existing financial institutions. From operating models to mindsets, approaches to new technology should be attuned to shifting customer sentiments – so that financial services and non-banking firms can deliver and respond to markets effectively.

This lets banks and financial institutions leverage technology to enable a higher degree of responsiveness that empowers teams and workforces to serve the customer better than one’s competitors. This wave of change is currently well underway, and banks that do not already have a strategy in place to move away from the complex legacy infrastructure that is constraining future innovation, risk getting left further behind.

Aman Sud is Chief Growth Officer, Publicis Sapient, ASEAN.

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