15 Mar, 2022 | 3 min read

How to Digitally Reprogram for the Future of Banking

  • Seshika Fernando
  • Vice President - Banking and Financial Services - WSO2

Photo by Kaleidico on Unsplash

Readiness Assessment

Is your bank customer-centric? Do its software development practices subscribe to agile principles? Is it taking full advantage of the scalability and reliability of the cloud?

We phrase these as yes/no questions, but the answers are anything but binary. There is a continuum of possible replies, and each one is indicative of whether your bank is prepared to lunge forward with a digital transformation. It doesn't make much sense to go ahead with a Siri API, for example, if your app isn't supported on iOS.

No matter how clear your vision of the end state, you can't get there unless you know your current state. And that's why it’s ideal if you could have an impartial, external party conduct a readiness assessment.


Digital transformation rests on three pillars: organization, technology, and product. While technology ends up receiving most attention in most digital transformation projects, attention must be paid to all three.


You know your organization better than we do, so this is where we will offer the least advice. Still, we can't totally ignore the human element. Any transformation must start with the structure which is to be transformed.

There is one thing we can be almost certain of about your organization is that there isn't enough of it: not enough skills, not enough budget, not enough time. To counteract that, your bank should make efforts to attract the best third-party talent. In a digital transformation this starts by giving convenient and easy access to outside API developers. If someone can make your digital transformation smoother without drawing resources from your internal team, you should find a way to let them.

Another important enabler of digital transformation is the outside-in approach, first described by Harvard Business School Professor, Ranjay Gulati. An outside-in company focuses on creatively delivering something of value to customers, rather than on products and sales. The concept has been around long enough that many businesses have convinced themselves that they're already outside-in and have been for some time. But unless your firm is agnostic about whether it produces all the inputs it provides to customers -- and there are good reasons a bank might not want to go all in on that -- then it isn't thoroughly outside-in. But the closer it can get, the further the digital transformation can proceed.

Of course, it’s easier for your bank to be agnostic about where inputs come from if it can provide world-class inputs. Successful transformations often start with the institutions ability to orchestrate a top-notch in-house team with a short list of vendors who provide databases, design tools, integration connectors, and monitoring or security tools.

Whether the developers are in-house or contractors, though, remember it is critical to communicate with them in real time via dedicated portals. In fact, communication is always a critical component of any initiative. Be sure to keep both service delivery teams and internal developers in the loop; you’ll eventually need their buy-in, and anything you can do to shorten their learning curves will surely be welcomed by all concerned.

The last thing we’ll say about this is the part that shouldn’t need to be said: Top management support is key. Any strategic move -- whether or not it is rooted in technology -- requires leadership -- not just acquiescence at the top, but a full-throated endorsement backed by commensurate amounts of budgetary priority and executive attention.

That’s not as easy as it sounds. To start with, a separate Harvard Business School study found that C-suite executives aren’t necessarily up-to-speed on what you are proposing.

“In our experience, long-held processes and norms for selecting top executives are notoriously slow to change,” the authors wrote. “Financial literacy is a baseline qualification for any top executive; we need to think about technological and digital literacy in the same way.”

Their research found that, while digital literacy was considered a key requirement for top IT or marketing jobs, it was off the radar for any C-level executives in finance, legal, supply chain, human resources or even operations – right up to the CEO.

But all is not bleak. The pandemic accelerated a lot of digital transformation, and those skills may be more firmly in place today than when they were surveyed between 2016 and 2020. Also, there are some specific strategies to get C-level buy-in. Information Week offers a checklist to get traction for IT projects more broadly:

  • Conduct an employee-wide survey which underscores the issues. “It's easy to ignore something or dismiss it until it shows up as direct feedback from your organization,” writes Information Week’s Jacob Morgan.
  • Hold an executive workshop. Getting senior-level leaders together for a few hours to discuss opportunities and obstacles. If they don’t have a few hours, at least consider a lunch-and-learn. It must be informative, but it can’t be an info dump. You have to allow time for discussion and debate. Otherwise, how are they going to walk away with the impression it was their own idea?
  • Bring in leaders from other companies to share stories. It becomes more real for management when they get the message from their peers.
  • Show clear cases to management. If you can’t get financial professionals to learn about technology, then it’s incumbent upon tech professionals to learn about finance. You don’t need an MBA, CPA, or CFA to follow the field-level help of a commercial, off-the-shelf package that can translate the need for transformation into net present value, internal rate of return, payback period, and other metrics that the top bosses can digest.


Still, digital transformation remains a technology-centered initiative. This can’t be done in PowerPoint alone. So just as you wouldn’t build a house without experienced carpenters, plumbers, and electricians, you wouldn’t build a new future-ready enterprise without adequate XML, JavaScript, and Java skills. That, by the way, is the start of the shopping list. There is a whole litany of talents you’ll need to deploy, but what precisely those would be depends entirely on your goals and your plan to achieve them.

But we mention that only in prolog to two key, foundational recommendations.

First, digital transformation requires more than the usual project and asset management attention. Orchestration of the entire ecosystem is critical to making your technology play an influential role within your product offerings and marketing channels. So, ensure that you structure your tech in a way which helps you do this.

Cognizant of your time constraints, we will rein in the bulk of our technical advice, but these points merit at least a brief mention:

  • If you’re a bank, security is paramount. Don’t underestimate secure communications, the complexity and CX benefits of mature digital ID management, fraud detection, or any other element of overall security.
  • Have a unified or integrated business platform with tools, standards, governance processes, business models, and communication channels.
  • Work simultaneously on front end and back end, ensuring constant communication between the two work streams. If one stream needs to move ahead of the other, it ought to be the back end. That’s where the APIs are, so that’s where true digital transformation happens.
  • Take an API inventory: what’s strategic, what’s ancillary, what works, what needs improvement, and what needs to go.
  • Understand and build towards cloud-native computing technology and practices. Accept that eventually, as technology, security, availability, and pricing evolve, virtually all processes belong on the cloud. But remember since the cloud is just other people’s computers, it must be deployed regionally, and the client must have access to the control center.
  • The whole purpose of cloud service agreements is to exchange fixed costs for variable costs, so make sure you are contracted for an adequate amount of computing units and have the budget to handle inevitable peaks.
  • Determine when to develop no-code, low-code, or full-code apps. There are tradeoffs between user-friendliness and robust development and, left to their own devices, some users might be unaware of their limitations. So, when giving them no-code access, have guardrails in place.
  • This might be a given, but take the time to determine if “mobile-first” is the way to proceed. It works for fintech firms and neo-banks, but there are branding, customer relations, and other concerns for established banks.
  • Artificial intelligence is not the only kind that matters. There is room for both static algorithms and AI in determining fraud detection rules. Still, consider using AI to predict how test results will change with scale.


As with the organization, we assume that you know your needs better than we ever could. Your bank must surely have some very smart people working full-time on developing products. But just to touch all the bases, we offer a few words of advice.

First, recognize that you have both external and internal customers. On the path to digital transformation, you’ll probably concentrate on the internal ones first. As you do, it’s important to identify and periodically reassess those functions that can be most easily routinized and streamlined as AI and cloud computing matures.

The next step, then, is to consider the product development challenge: taking a procedure performed by an employee and turning it into one performed by a customer. That is, after all, a major imperative of digital transformation.

Lastly, we want to caution you about partnering with fintech firms. They often have front-end solutions tied up in a bow for you, and you might be tempted to use their offerings as a shortcut instead of developing your own. While we certainly don’t issue a categorical “No!” to that proposition, we urge you to fully consider the implications.

“[D]igital account opening has been the most popular type of partnership [in 2020] as

roughly three in 10 institutions have ‘partnered’ with a fintech for this type of technology,” according to Cornerstone Advisors. “We put quotes around … “partnered” ... because we don’t believe that what financial institutions are doing here really qualifies as partnerships. They’re vendor relationships—not partnerships.”

And, at least as far as U.S. regulators are concerned, that’s as it should be. Your bank has know-your-client (KYC), anti-money laundering (AML), counter-terrorism financing (CTF), and other compliance hurdles. Your fintech “partner” might not. These are compelling reasons why you should maintain some hold over your customer relationships.

To know more about procedures for setting the foundation for a new digital target state, please download our e-book as a first step.

Photo by Kaleidico.