Digital Transformation – Your Guidebook Has Arrived

In one way or another, the same question about digital transformation is asked in nearly every panel or presentation I am a part of. Where should I start? It’s a tricky question to answer, as every financial institution finds themselves somewhere different on their digital transformation journey. Looking at the journey in phases may help make a digital transformation more manageable and more focused to help bring customers and members better experiences faster, while minimizing the impact on the day-to-day realities of running a financial institution. So what are those three phases?

Phase 1 - Peripheral Innovations 

When you look at the journey, this is usually the easiest place to start. It’s about working on solutions that would sit next to your existing infrastructure and not require re-working solutions you already have in place. Peripheral innovations involve looking at a single use case or offering, whether that is a P2P product/solution or a new loan payment system. Starting with peripheral innovations at your institution is minimally invasive. As you may guess, they don’t require much more than a simple core API call or light batch-based integration. They may potentially call for an SSO or an embedded experience into your online banking solution, but minimal effort is needed in terms of internal employee training. It will require working with your end-users, but ultimately the new experience and or service will be net positive, and again depending on the use case, minimal in impact. Customer experience is really where this innovation area is focused. Peripheral innovation was once the world of the “garage” or “innovation lab.” Today, cloud-based solutions and platforms are readily accessible for financial institutions of all sizes. These scalable solutions require minimal investment and internal resources as you start your journey. 

Phase 2 - Existing Product Enhancements/Extensions and Co-Existence

In the next phase of the journey, we move into slightly higher impact areas. Switching vendors or solutions live in this realm. The impact levels in this phase are high because you are changing existing experiences and functional items within the FI. Looking at this through the digital transformation journey lens, this step is where you are really tackling your existing product set and trying to enhance/extend your current offerings, moving from an older generation of online banking to a new digital banking offering. This phase is where we really start to build the bridges from older solutions and infrastructure to migrating to volume-based use cases. This phase in the journey is the hardest one to tackle as you are directly impacting experiences. This was also traditionally the domain of “rip and replace”, which gave many in the industry anxiety over the past two to three decades. Similar to the peripheral innovation layer, cloud-based solutions enable financial institutions to maximize their existing investments without sacrificing their digital transformation journey goals. Cloud-solutions designed to scale on demand make running a coexistence strategy to safely and comfortably migrate volume possible.  

Phase 3 - Digitally Transformed 

The promised land…or at least the promised ecosystem. Once you have reached our third phase, you are running an infrastructure that supports open APIs and is driven by microservice-based architecture. The ability for you to quickly add new functionality is now possible due to the easily accessible nature of the microservices within the application layers you have deployed, all tied into a real-time core banking system. Adding new channels of engagement, whether it’s IoT or channels such as voice or augmented reality, your ability to extend services is no longer based on the inability of your infrastructure to support it. It is based on whether the market is ready for your innovative services. You now can be fully proactive, working with your customers to identify areas of need and innovation versus reacting to their needs you haven’t met.  

If you look at the journey holistically, the digitally transformed promised land may seem far-fetched, or at least something that is a decade away. In reality, there are steps your financial institution is likely already taking in phase one to make this reality closer than you think. So break your process down, look at use cases or business models that need help immediately and look for solution providers that have the platforms and tools available to help your institution take the right steps on your journey towards a digital transformation promised land. 

What does digital transformation mean to account holders? Read Payments Modernization: An Account Holder View. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments,  digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.