How Financial Institutions Can Use Technology to Improve the Customer Experience
A discussion of how financial services companies can utilize cloud-based “fit for purpose” solutions to improve their ability to compete, provide better customer service, and deliver solutions to market more quickly, with Oracle Cloud CTO Yonas Yohannes, The Hackett Group Director Jay Ruffin and Manager Matt Williams.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Gary Baker, Global Communications director at The Hackett Group. Today’s episode will discuss how financial services companies can utilize cloud-based fit-for-purpose solutions to improve their ability to compete, provide better customer service and deliver sources to market more quickly. Our guests are Oracle Cloud Chief Technology Officer Yonas Yohannes and The Hackett Group’s Director Jay Ruffin and Manager Matt Williams.
To begin, Yonas offers a look at the trends currently impacting banking and their ability to compete. Banks, he reveals, are currently going through a watershed moment similar to the printing press. The pandemic, which banks were unprepared for, only accelerated the obvious need for change within the banking system. Thus, they have laid down a foundational platform to really adapt to change and position themselves in the new normal. Their biggest challenge is that new regulations and trends have accelerated the flow of new entrance into the marketplace, including large tech companies and talent. Banks also have to consider the changing expectations of customers. Finally, they face a challenge in the talent and labor market.
From Jay’s perspective, at The Hackett Group, consumers are generally starting to perform more on digital channels than traditional contact methods. We are also seeing banks become more experience-oriented. Finally, the pandemic caused people to leverage their personal technology devices for their own preferences. Many consumers are not loyal to a singular bank and will go to whoever is able to provide an optimal customer experience. Finally, he predicts that artificial intelligence, virtual assistance and machine learning will play a key role in the future.
Then, Matt unpacks how a fit-for-purpose solution might help address these challenges. The largest benefit of fit for purpose, he reveals, is how customer-centric it is. When we see clients migrating to cloud solutions, it is crucial to understand some of the industry-specific requirements to best serve your customers. We see more traditional general-purpose solutions often slower to adapt to changes. Fit for purpose utilizes no-code workflows and prebuilt industry solutions that can be quickly adapted to fit certain customer needs. Additionally, they are more agile in decreasing the amount of time it takes for customers to obtain solutions. Legacy systems, which have been around for decades, are the elephant in the room for most banks in terms of transitioning to the new normal.
Banks pre-pandemic primarily were going through a change, but this change was incremental. The idea of modernization was tricky, intimidating and not totally necessary. While they knew they wanted to change, they didn’t realize where they were in terms of where they needed change and the pace to do so. They had not yet compared their pace needed for change to best serve their customers with the pace fintech was changing. In the pandemic, they had to figure out how to provide services from home to continue operations. The Hackett Group’s data reveals that about 60% of financial institutions use their information technology budgets to maintain legacy systems. A fit-for-purpose solution with less baggage can enable them to move faster and smarter.
When considering best functionalities, we can start by breaking down what a fit-for-purpose platform should look like for banks. On one hand, they need the actual cloud to provide a mechanism for banks to assemble their solutions rapidly, modernize and provide API solutions. Banks also need the capability not to lay code from the ground up and workflows to assemble rapid solutions. Finally, are data models for banks and prebuilt solution models straight out of the box? Oracle is also providing an autonomous database, which primarily works as a self-driving vehicle from the database solution stack. On top of being a software company, Oracle has been in the market as a fintech company for over 20 years.
Before wrapping up, Yonas discusses what financial institutions are doing to differentiate their cloud solutions from one another. First and foremost, they are launching modernization products and initiatives. They are also dealing head on with the competition from fintech and Big Tech. Additionally, they are incorporating environmental, social and governance, and diversity equity and inclusion policy into their board operations. Leaders know that making these big changes is not optional if they want to have a fighting chance against the new entrances of Big Tech and fintech companies. Leading financial institutions are leveraging a very robust cloud migration continuous improvement life cycle to find modernizations and transformation. Finally, Jay touches on The Hackett Group’s study regarding how companies have leveraged cloud migration and EPS.
- 0:56 – Welcome to this episode hosted by Gary Baker.
- 1:37 – The trends impacting banking and their ability to compete.
- 6:01 – The Hackett Group’s perspective on the changing banking landscape.
- 7:55 – How a fit-for-purpose solution could address some of these challenges.
- 12:13 – Why haven’t banks leveraged these solutions before now?
- 16:03 – What functionalities are banks looking for?
- 19:22 – How are financial institutions differentiating their cloud solutions from one another?
- 22:35 – What leading financial institutions are leveraging.
- 24:22 – The Hackett Group’s study on cloud migration and EPS.