Why CX in Digital Banking Requires Modern Back Office Operations

Is your financial institution a Potemkin Village?

You may not be familiar with the term, but I’m sure you’re familiar with the concept. A Potemkin Village is an impressive façade or display front that is hiding an undesirable state or condition within. In other words, a false front.

Today, many financial institutions in their zeal to look modern and match customer digital expectations, have erected beautifully crafted front ends that promise to onboard customers and grant access to digital products with just a few clicks of a button.

However, behind the scenes, their legacy systems, manual processes, and antiquated thinking prevent them from living up to that customer experience promise. Hence, the false front.

The Foundation of Digital Banking

The only way to achieve durable success at scale is to bolster back-office processes so that they are as effective and elegant as the face you show to the customer.

The good news is that financial institutions of all sizes have access to new technologies and methodologies that harmonize back-office operations. Technologies such as artificial intelligence, machine learning and robotic process automation (RPA) — coupled with agile development methodologies and low code/no code tooling – are allowing financial institutions to modernize back-off systems at a pace that is affordable and digestible, while also adhering to compliance rules.

Getting started is not difficult, but achieving an effective outcome is not guaranteed. While 97 percent of enterprise decision makers see these technologies as vital to their digital transformation, 88 percent of automation projects are stymied by project scope changes, disjointed systems and environmental factors that cause projects to take longer than anticipated.

The Secret to Success

If so many agree on the solution, why do so many projects run into trouble?

One mistake FIs often make is they initially bite off more than they can chew with their first automation projects. The focus should be on starting small, accumulating quick wins, and honing methodology. Instead, too many attempt to automate highly complex processes geared towards “running the tools through all their paces” and accommodating all the institution’s needs in one stroke. They try to boil the ocean. Most FIs, especially community banks and credit unions whose resources are at a premium, cannot afford to take that approach.

When it comes to digital transformation, the only aspect of the journey that should be big, bold and start from the top down is commitment. Once commitment is secured at the highest levels, the journey focus should then shift to the bottom up. Meaning, develop a methodology for selecting bite-sized projects, streamlining and standardizing workflows, selecting tools, managing development and deployments and iterating from there. Rather than focusing on whether the tools can do the job (which they can), FIs should focus on their firm’s mindset and ability to get the job done. Not only is this approach “doable”, but it can also be done at a pace consistent with the firm’s culture.

Implementing a modern back-office operation via a big bang is not for the faint of heart, and it’s prone to fail. It makes more sense to build the back-office operation brick-by-brick on as much existing infrastructure and desirable process as possible. The process should be four-fold:

• Define strategy
• Target projects tactically
• Build iteratively
• Replace selectively

This way your organization can continue to make forward progress at a cost and pace that works for you. All the while, slowly and judiciously integrating new technologies and methodologies that allow you to transform your Potemkin Village into a flourishing town that delights villagers and encourages them to put down long-lasting roots.