Banking On Data: The Path to a New Bank Operating Model

21 Jun 2017

by Nick White

I was delighted to be asked to contribute last night to BrightTALK’s ‘Banking on the Future’ meet-up event. A very well-attended event here in London and broadcast to hundreds of online registrants across the world.

The theme of the event was how banks need to react to regulations such as PSD2, GDPR and here in the UK, Open Banking.

BRUTE FORCE ISN’T THE DATA SHARING PANACEA

It is clear that the ‘brute force’ approach to Open Banking compliance is not enough. Read and write files will not create sticky customers. Banks must come up with customer-focused solutions, as Becky Clements, Head of Industry Engagement at Metro Bank attested to as she spoke on the first panel discussion.

Banks must also ready themselves for a very unfamiliar world. One where Open Banking API’s mean that they need to have an infrastructure which supports a B2B model. Support services, Troubleshooting and reporting will all be expected. Updates to API’s will be expected as standards evolve. They will need to engage with an entirely new world – the Developer community have high expectations. As Chris Gledhill, CEO of Secco Bank said of banks ‘the digital train is leaving the station and you’re either on it or you’re not’.

As well as needing to support third parties using their API’s, banks also need to be ready to compete for business that once was theirs by default. Simultaneously pulling off a step-change in the pace of their own improvement processes, whilst also inviting greater competition.

A NEW BANK OPERATING MODEL

A new bank operating model is therefore inevitable and in our discussions with all of the leading UK banks, this has been a recurrent theme. But banks haven’t been dealt an easy hand, with strict compliance on top of legacy systems having hindered the innovation that does lie within. They need assistance to transform themselves from Titans of the Big Marble Buildings to lithe digital players.

COLLABORATION IS STILL THE ANSWER

Now, more than ever, banks need to collaborate in order to catch that ‘digital train’. They need help with their huge volume of luggage, because they won’t get it all on the train in time otherwise.

OUT WITH THE BEHEMOTH PROGRAMMES

Transformation programmes are not the answer. These behemoth programmes almost always come to a standstill in all directions, causing transformation gridlock. An entirely new way of working is the way to achieve this mammouth task. Engaging digital platforms, new sets of developer-optimised tools, automation-wherever-possible and cultural adoption of agile principles is how this will all be achieved.

IN WITH THE STEP-BY-STEP APPROACH

However, gone are the massive consultancy-led programmes of the past. FinTechs don’t do that! It takes small steps to prove to an entire bank they can work differently and compete in this new world. Start off with a small challenge, prove the new model and expand from there. Success breeds success and once it’s been proven a few times, barriers tend to fall.


Click here to watch the panel discussion for yourself on BrightTALK’s website.


 


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