Connecting the front and the back office in banking

By William Girling
With insights from Laurén Robbins, VP at ServiceNow, we explore how banks can escape the ‘innovation trap’ and enable true technological agility...

With insights from Laurén Robbins, VP at ServiceNow, we explore how banks can escape the ‘innovation trap’ and enable true technological agility.

With the rising popularity of digital-native banks such as Monzo, Nubank and Revolut, traditional banking institutions have realised that digital transformation and its ability to introduce lean and agile business practices is essential. Important not just for optimising the efficiency of an organisation itself but also for driving a better overall customer experience, a thorough and intelligently actioned reimagining of a bank’s processes does not need to alter a bank’s front office image or sacrifice security to enable fluidity in the back office. True lean and agile thinking should encompass the totality of an organisation’s operations in a technologically practical way, without sinking into an unproductive ‘innovation trap’. Using exclusive insights from Laurén Robbins, we explore how banks can best achieve this goal. 

As with any significant change to an organisation’s operations, the first important consideration for the implementation of an agility-based tech strategy should be focused on structure and culture: what is the bank’s current state and how can changes be made most effectively? “It's really about looking at the talent, tools and processes already in place and figuring out the gap between how they're operating and what they would consider to be agile,” states Robbins. Appended to this point is the consideration of staff skill; do new employees need to be hired to drive the bank’s new vision of digital operations or can the existing workforce be re-skilled in order to meet the requirements of the changing role? In its article ‘Shaping and safeguarding the banking workforce after COVID-19’, McKinsey & Co is of the opinion that “microskilling, upskilling, reskilling, and hiring new talent” should all be considered; the ‘war on talent’ is becoming one of the most prominent themes of business in the digital era. Thirdly, establishing strong partner ecosystems which can drive a bank’s innovation and shape its mindset are crucial for keeping the changes on-course.

Contrary to those who might view the matter as a binary choice between developing in-house solutions or collaborating with/acquiring FinTechs, Robbins takes the stance that, while both have merit separately, the best approach actually lies in the middle and is often circumstantial. “Banks feel that they are at a decision point: they have to decide whether they want to become very IT literate and compete with the best FinTechs in the market, or if they’d rather focus on what they’re already strong at, i.e. serving their customers. The reality is that the best IT environments we’ve seen within financial services tend to be a hybrid of both; I’m in favour of incorporating higher IT standards into industry solutions to enable a faster ‘plug and play’ approach.” 

Examples of this include Starling Bank’s collaboration with Currencycloud and its integration of the latter’s Spark platform. Capable of facilitating multi-currency transactions across 30 countries, Spark is nonetheless a background process, meaning that Starling (and others) can easily incorporate powerful third-party system architecture while still owning the customer relationship and experience. Thought Machine’s ‘Vault’ - deployed by Atom Bank - operates on a similar principle: replacing monolithic services with seamless microservice APIs, its cloud-native suite of back office services can help to keep modern banks flexible, scalable and highly secure. 

According to Robbins, these notable collaborations by leading financial institutions are on-trend with a shift in the market’s attitude towards digital transformation and, by extension, lean and agile thinking. With aspects of customer service now capable of being automated (RPA or chatbots) readily, banks can begin fully exploring the agility unlocked by cloud or even the more sophisticated aspects of AI (artificial intelligence). “The first wave of digital transformation has unleashed productivity and innovation at the front end, but banks are now realising the next frontier. Now, I expect to see modernised operations focused on mid to back office,” she says. 

Indeed, the aforementioned advances in AI could soon permeate several core aspects of essential bank processes, enabling human workers to refocus their efforts on value-adding services and therefore creating further opportunities for leaner, more efficient services. “I even think things like fraud detection, if you look at how fast the industry is digitising, could soon be able to detect fraudulent transactions with a set of AI-based rules,” continues Robbins. The value of automation is particularly clear to ServiceNow itself with the creation of its Workflow product, which streamlines operations and mitigates bottlenecks through the elimination of manual processes and legacy systems.

Robbins’ four key deliverables for enhanced digital solutions within financial services:

The following were listed by Robbins as ServiceNow’s core deliverables for its Workforce product. However, when applied generally, they form a concentrated roadmap for any bank or software provider seeking to upgrade existing IT capabilities in banking. 

  1. Offer front-to-back process solutions which create efficiency, productivity and workflow resilience.
  2. Full system integration without the subsequent need to invest in additional middleware or services.
  3. Produce easy to set up or ‘out-of-the-box’ workflows built around the finance industry’s particular standards.
  4. Integrate risk management capabilities and policy compliance so that customers can receive efficiency gains from the process without sacrificing security.

Ultimately, a bank’s goal for leaner and more agile operations should be to achieve better outcomes for its customers. Doing otherwise, Robbins posits, could lead to an ‘innovation trap’: a scenario wherein an organisation spends too much time and too many resources on digital ‘improvements’ which have no effect on performance. As with many things in business strong customer-centricity will often indicate the optimal route for development and this is certainly what Robbins advocates. “Greater agility means faster product R&D,” she explains, “and for the customer that translates into quicker turnaround times.” Robbins goes on to cite the US’ COVID-19-related paycheque protection programme (PPP) as an example of inflexible bank operations having slow and costly outcomes, an opinion seemingly borne out by MIT Economics’ evaluation which estimates that $518bn has been spent on it so far. Had the banks employed lean and agile thinking, Robbins intimates, the figure could have been much lower while still providing Americans with the support needed. “When you have these more agile technologies in place, that allows for greater front-to-back conductivity, which, in turn, translates to better turnaround times for customers.” 

As the coronavirus pandemic continues to cause financial anxiety for people around the world, banks owe it to their customers to re-evaluate how they operate on a day-to-day basis in order to meet the challenges of today’s economy. “Banks and financial institutions can get stuck at the ‘proof of concept’ stage and therefore have a myopic view of the problem, only focusing on siloed issues,” Robbins concludes. “Instead, they should look at things holistically with an integrated, cloud-based, end-to-end tech solution. It will enable the agility that banks are looking for without the need for investing potentially millions of dollars in granular core system modernisation projects.”

Laurén Robbins is a Vice President and General Manager of Financial Services at ServiceNow, one of the foremost enterprise software developers in the world.

“I lead an organisation of industry experts across the different sub-verticals of financial services, banking, asset management, insurance, risk and compliance. We're responsible for creating and executing services for the industry by collaborating closely with our customers and partners to build specialised solutions that solve the most pressing challenges experienced in the market today.”


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