Unleashing Digital Transformation through EA

My previous article examined the customer journey as key to understanding customer needs. This, however, means nothing if the organisation cannot be sustained.

When considering the financial services enterprise of the future, it’s not enough to simply aim for excellent customer service. Unless this generates higher levels of profitability, better customer retention or improved customer acquisition, any customer service effort is going to be in vain.

• Should banks still be classifying customers into vast segments based primarily on monthly income?
• Should they still be quantifying affordability and risk in the same way?
• Should they still seek to derive their non-interest income from monthly fees and transaction fees?

These three questions above – relating to a financial services company’s business goals – should be guiding forces for the architecture team, as they create the optimal design for the future.

In essence, the firm’s architecture needs to enable the flow of information and investment of resources to the markets, segments, demographics and regions that offer the most profitable opportunities at any given time.

"The firm's architecture nees to enable the flow of information and investment of resources to the markets, segments, demographics and regions that offer the profitable opportunities at any given time"

As financial companies come under increasing threat from new competitors, narrowing the focus to certain services, or markets, is a way of maintaining profitable leadership positions in certain areas – while exiting over-traded, hyper-competitive or unprofitable markets.

However, this is no longer a static, consistent landscape. To succeed, financial services firms should be “striving for continuous improvement and renewal”, as a recent Backbase/Efma Report describes.

From an EA perspective, this means one’s technology and application architecture must support the rapid and continuous delivery of new services and features to customers.

“The innovation planning cycle is far too slow for today’s high-speed digital banking environment,” notes the report, adding: “Today’s big digital players in other industries test and learn as part of an iterative process. They’re agile and experiment in real-time with their own customer base. The decision-making process is much faster and the rollout is fast … very fast!”

Across the breadth of architecture realms - from business, information, data, applications and technology - one’s EA frameworks should be designed with rapid prototyping and delivery in mind. By doing so, financial companies are able to capture new windows of profitable opportunity, react faster to changing customer demands, and produce new services in a cost-effective manner.

This could come in the form of instant home loan approvals, new services for wearable technology, or a concerted focus on a niche insurance segment. The specific opportunities depend on the company in question and where they are at a given point in time.

In short, having the architecture to unleash digital transformation, opens up new value streams for the bank and increasing satisfaction and loyalty for the customer.

My next article concludes the series with a look at anchoring the digital transformation for competitive advantage.