That’s enough lipstick (Part 1)
Digital initiatives remain a major priority for retail banks.
Addressing these competing and concurrent challenges whilst making the transition to full digitalisation presents a daunting task for banks. How they undergo this transformation while still constrained by their historic business models, processes and methods of doing business remains problematic. Many still have legacy IT systems and architecture which consume significant amounts of their IT spending, making it difficult to invest in new innovations.
In this environment, digitalisation requires banks to adopt new technologies and re-evaluate their traditional business models in pursuit of strengthening relationship with customers. This process is already underway but the results fall short of what is genuinely required. Too many banks believe digital transformation means creating digital products and services whilst still maintaining existing business models and legacy systems.
This approach cannot be considered to be real digital transformation, it is merely cosmetic in its approach to change. This point was illustrated by Mark Mullen, CEO of Atom Bank, one of the UK’s leading digital only banks. He said:
“Banks are trying to be cool and hip and build super cool digital front ends…but it’s like putting lipstick on a pig – ultimately it’s still a pig and the new front end is still running into an awful digital back end”.
In order to create a truly digital business, banks must put down the lipstick and make a more concerted attempt to understand the cultural and technological changes needed for digital transformation.