• October 12, 2016

The First Signs of a FinTech Style IT for Banks

Innovation labs within banks now delight in the sheer number of possibilities of new and emerging technologies.

Innovation labs within banks now delight in the sheer number of possibilities of new and emerging technologies – the omni-channel, capabilities for cognitive and machine learning, and even the phenomenon of the Internet of Things (IoT) indicate that banks are up for a heady era of creation and innovation. Technology innovation roadmaps are now marked by a pursuit of many different things by the bank, which builds to one overarching question: Amid the confluence of choices, what really are the next best steps for Asia/Pacific banks?

One of the first steps worth taking is an evaluation on how technology resources need to be planned for, procured and provisioned for in the new era of IT.

In fact, many leading banks in the region have recently undertaken a more thorough review of their IT spending, which led them to realize that even if IT budgets move up only slightly moving forward (the growth will in fact be healthy, at about 6% annual growth up to 2019), the bank can afford to invest more. There are certainly positive developments that banks can take advantage of. These include the reduction of costs associated with traditional hardware such as storage, servers, networking and so forth, as well as the greater availability of cloud computing. These trends portend relief in some areas of high, and frankly, inefficient spending in the past.

The outcome for many IT leaders as they complete this spending reassessment is how they can put in place true IT-as-a-service for their banks. To this end, they are optimizing workloads, business processes, applications and IT systems – and providing the IT resources needed to support these. This is the “Integrate” dimension of IDC’s new framework for IT Leadership: Leading in 3D. When the IT organization succeeds here, it becomes a mature broker, integrator and orchestrator of the delivery of IT services. Surely, this is a welcome development for IT that has been too long considered a mere support function,  so that the CIO and the IT organization become an enabler of performance and innovation of the bank. In short, IT ensures that innovations can work, especially when they scale.

And banks indeed have innovated. Notice the release of at least one new digital-channel initiative in Asia/Pacific daily, or the improvements in turnaround time for key business processes, or the launch of products that respond to customers’ needs for instantaneous, personal and advice-centric offerings. The innovations have gathered pace to the point that banks (or at least the most active ones) can be seen to take the playbook from FinTechs.

Still, the FinTech mindset needs to be made more real – and not be mere articulations of the bank’s  vision of “doing more new things”. For sure, the way that IT works has to change – for example, in being pragmatic about how IT capabilities can be sourced and provisioned, but keeping to high standards of availability and scalability, and standardizing innovations into enterprise-grade platforms as quickly as possible. These seem to be the modus operandi of FinTechs that banks can learn from. Banks too can recast their IT vendor strategies, partnering with the right vendors with the right experience and depth of industry knowledge to  help bring things together. These partners should possess competencies in both traditional infrastructure and  digital technologies, capabilities to bridge old and new enterprise strategies, and able to bring together a diverse ecosystem of partners for a reimagined bank.

 

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