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In our webinar series Challenge the Challengers, experts discuss how an approach to transformation that allows banks to be agile and responsive to evolving customer needs can help them stay relevant.

Success in today’s fast-changing world of financial services depends not just on having the right technology, but also on the right approach, the right culture and the right people. Not all banks are lucky enough to have all these elements in place.

To keep up, they need a new mindset, one that sees change as a fact of life and agility as the way to deal with it. Banks that don’t adopt this mindset will be powerless to transform and modernise their businesses. They will remain static, gradually losing relevance. As Dr Thomas Boltze, CTO at Asto, Santander’s speedboat, says: “The difference between [successful and unsuccessful] companies and cultures is how well they’ve built themselves up for supporting innovation.”

Given that the pace of change in banking is still accelerating, being in a position to keep up with that change is vital. The webinar panel were unanimous on this. Banks need to have the technology, culture, people and processes in place to be nimble, agile and able to work with an interchangeable ecosystem of service providers.

“There is no end-state,” says Dr Boltze. Everything must be built to adapt, change, fit together differently, produce different outcomes and work with a range of new and different third parties. And the trigger for this approach must be customer needs.

Asto’s customers are SMEs who want fast loan approvals. This is met by using technology to automate processes for Know Your Customer, Know Your Business and anti-money laundering checks. Automation has allowed Asto to reduce the gap between the loan request to money in the account to 10 minutes. The solution frees up precious time for SMEs, as well as delivering liquidity. Here, customer needs dictated the solution.

Banking is becoming a service that helps people live their lives.
Sharad Gupta
VP Financial Services, Wipro

Sharad Gupta, VP Financial Services at Wipro, echoes this for the retail sector. He says banking is becoming a service that helps people live their lives, rather than simply providing financial services. He offers an example of his own experience to drive home the point. Gupta was running late for a meeting when he got an alert for a suspicious payment on his credit card. “I had no time to call and get my card cancelled. But… there was a mobile app [on my phone] with a button which says off or on for your card. I just switched it off.” Problem solved.

As customers’ lives change thanks to technology, so banks need to evolve with them. Whether a new challenger start-up such as Varo or a new digital brand launched by an established bank, such as ABN AMRO’s New10 or Goldman Sachs’ Marcus, it must be able to keep up with the pace of change. To do this, Dr Boltze urges banks to take a leaf from Eric Schmidt’s book.

The former Google CEO says a company needs to spend 70 per cent of its time optimising its core business; 20 per cent innovating; and the final 10 per cent looking at transformational projects – “the moonshots”. And while doing so, it’s vital to remember that failure is acceptable. Try. Fail. Move on, says Boltze.

According to Eugene Danilkis, Mambu CEO, more banks should be prepared to kill digital offspring that don’t thrive, citing RBS’s digital bank Bo as an example. “RBS took about 18-24 months maximum from the time [when Bo] was a concept to the time that it was completely abandoned. The political and operational costs were relatively low. It was an effort that spun up and it didn’t work. But the impact was relatively minor,” he says.

This acceptance of failure and the importance of innovation and agility also require a new approach to business KPIs. Where traditionally a bank has seen good governance as the ability to minimise risk, managed risk – where something new is tried out – in line with an agile approach can be good. Similarly, aligning staff incentive schemes to quarterly results puts the brakes on change.

Banks’ most successful transformations happen quickly. They don’t run digital projects for four, five or six years, but spend a matter of months identifying the customer need, then planning, building and quickly launching their new bank or banking service. That means their initial goal is still relevant. When banks are capable of adapting, growing and moving with the times, they stand the best chance of success.

For Dr Boltze, it’s simple: once you have identified the customer need, speed is of the essence. “You need to build something that takes a short time. You make your MVP [core product] as small as possible, get it in front of people and learn.”

Anyone wishing to hear the full webinar can access it here.

The panel was made up of Eugene Danilkis, co-founder & CEO Mambu; Dr Thomas Boltze, CTO Asto; and Sharad Gupta, VP Financial Services, Wipro

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