No more “digital on the side” — it’s time to go digital to the core

The 5th annual Backbase Connect 2018 kicked off this morning with a full house — an audience filled with familiar faces from last year and many new attendees. CEO Jouk Pleiter opened the day with some lessons learned from tech giants like Amazon, companies that grew fast by using the capacity of the digital platform. He highlighted how digital add-ons to legacy bank products won’t work anymore. Banks need to overhaul the architecture with technologies like modular platforms, micro-services and cloud deployment. It can be hard for banks to see this however — record profits reduce the perceived urgency, but the business model is changing fast and a massive culture change is needed to respond.

Backbase Connect

The 5th Annual Backbase Connect

Owning the customer experience

All of these changes mean that the customer experience is the new core business and owning that means creating a digital first business model. Speed and flexibility are crucial, so it’s time to move towards a start-up state of mind. Small, nimble, cross-functional teams that are empowered to deliver on the digital-first agenda are key to success. But how do you create this when dealing with thousands of people? That was one of the secrets revealed today.

The simplicity and clarity of the connected experience

Tim Rutten of Backbase brought us into connected experiences. He explained how work on the customer experience essentially never stops — it must be changed and constantly polished. Banks should create solutions that stay seamless because they are based on an aggressive focus on the customer journey. This makes it possible to create sticky apps that remove all friction and Tim demonstrated some real-life examples of how this works.

Jelmer de Jong, Paul Heijmans and Manuel Schreurs of Backbase brought us into 2019. They dived into the Backbase product roadmap with a presentation that highlighted developments including the launch of Backbase identity, the capabilities of Backbase campaign manager, and recent developments with the cloud.

Future proofing banks for a solution economy

Jo Caudron of Duval Union showed us what it really means to future proof a bank. He noted that financial services will be reinvented as people move into a solution economy, one where we replace car ownership with transport solutions, or house-buying with accommodation solutions. In this future scenario, will we even need retail banking?

Banking will definitely be around as long as people need financial services, the big question is who will lead this industry? Jo outlined the importance of tracking industry change and using that vision to bring in the right capabilities and deep culture change. Banks must move beyond digitizing current processes. They have to stop tweaking channels and products, reinvent business processes and alter their way of thinking. They must digitize who they are — it’s time to create a new DNA.

Customer-centric changes

Chris Higgs and Sheldon Winsor of Royal Bank of Canada (RBC) showed us how they took on the pain points experienced by their clients and employees  and won. This bank, the largest in Canada, faced a huge challenge of turning around 150 years of legacy systems and processes. They wanted to focus on the client and make omni-channel work. That happened when they combined the right technology with the right mind-set.

RBC went agile throughout the organization. They moved tasks out of the back office to deliver straight through processing for clients. They scrapped waterfall development processes and combined developing and testing teams to speed things along a dev-ops pipeline. A keen focus on the customer journey drove their actions, and they learned how the Backbase platform could deliver on every aspect of it. The results speak for themselves, RBC now launch a few times a month, rather than a few times per year, and are the first Canadian bank with an external API store for developers to tap into.

Making failure an option

Ranjit Das of Strathclyde Business School told us the main reason products fail in the market is that people get so busy developing the product, they turn their back on the customer. This happens a lot with new product development. Companies get absorbed in a new product and don’t kill a weak one early enough. Products can even become pet projects, pushed through regardless of the latest market realities. In many cases the customer’s spec has already changed by the time a product launches, so it’s irrelevant from day one. Rather than funding a few products to completion, under the lean start-up methodology, a company funds lots of products, but kills them early on if needed. Ranjit suggested forgetting about ROI, but focusing on the probability of success or failure. This lets you reach go/no-go point with new products in 6 months, rather than the standard 3 years. The time and resources saved on completed failures are worth it.

A key component of using start-up principles is culture change and that has huge ramifications. Money gets moved towards product managers and away from R&D so the eye stays on the market when investment decisions are made. A deep understanding of the customer’s challenge drives the program and clear boundaries are set for when a product is dropped.

Culture change is fundamental to all of this and that’s the hardest hurdle to overcome for everyone. For those that manage to do so, the benefits are there for the taking. A different way of thinking creates a different form of success — a future proof one.