This is part 2 of a 4-part blog series on banking and data maturity and the effect of legacy systems on customer experience. Check out part 1 here.
Don’t Let the Back Office Hold You Back
Everyone wants to improve the customer experience. The problem is that while banks have historically made the transaction process efficient, their back office is holding them back from converting that to a streamlined customer experience. In most cases centralized operations are too slow, inefficient, and inflexible to meet customer expectations, and the data needed to personalize interactions remains trapped in disparate legacy systems. The new model is a back-to-front approach, making operations engage with consumers and allowing them to see how things are processed. In other words, the back office will need to resemble the front office
Jack Be Nimble, Jack Be Quick
Most legacy systems desperately need to focus on customer journey optimization, core system replacement, and organizational agility. According to a survey by Accenture:
- Nearly 80% of bank operations leaders say their organization’s existence could be threatened if they don’t update technology to be more flexible and capable of supporting rapid innovation
- 74% of bank operations leaders said that improving the customer experience is currently their top strategic priority
- 69% believe that customer insight that could be used for improved products, expanded services and simplified processes is not currently being leveraged due to legacy systems and dated back office processes
- Nearly 70% of banks believe that their operations hold trapped value that’s not currently being accessed
Younger Companies Are More Data Mature
Unlike traditional organizations, which must adapt longstanding infrastructure and operations to today’s data driven environment, Internet-based entities — such as HelloBank, N26, PayPal, Robinhood and others — are designed from scratch to operate and compete in the digital age. Not surprisingly, these digital natives generally surpass traditional companies in analytics capability and maturity.
Never Too Late To Update
The good news for legacy systems is that these disrupting companies’ advantage is merely strategic, not technical. Many of the tools that help digital natives thrive are open source — from big data platforms like Hadoop and Spark, to advanced machine intelligence and deep learning tools such as TensorFlow and MXNet. With the right strategic framework for implementation, measurement and analytics follow-through, a traditional company can leverage those same resources to remain powerful and highly competitive.
Established brands like Capitol One and American Express have done just that — positioning themselves strongly in the market by combining a historic and trusted brand with robust analytics and up-to-date capabilities operating at scale. Such high performing organizations are characterized by:
- Objectively measuring their analytics maturity on a consistent basis
- Constantly improving the skills and capabilities of both top analytics professionals and the broader business user community
- Strategic piloting of capabilities, followed by steady expansion of the business areas where analytics is being applied
- Investing in “leapfrog” technologies rather than limited, incremental improvements in legacy technologies
- Consistently tracking the corporate performance gains – and demonstrating for colleagues the value generated from the investment in analytics
Digital Banking or Bust
Established players aren’t all waiting to update. JPMorgan realized early on that the value in a solid ecosystem of digital products begins with the ability to onboard customers in a fully digital manner, building a completely digital bank. Historically, their account conversion on legacy systems had taken place offline — and as a result, was very expensive. But Morgan executives put their money where their mouth is, having spent millions to upgrade their systems to digital. One major reason is that customers no longer need to rely on banks for financial services, with 60% of US bank customers saying they’re willing to try a financial product from a tech firm they already use. And that number rises to 73% for customers aged 18 — 34. So banks need to redefine their offerings, and in the case of Morgan’s recent no-fee announcement, give them other reasons to stick around.
In our next post, we’ll delve into what’s involved with digital transformation, what might make sense for your organization and how NGDATA can help.