A Q&A on digital transformation

with Victoria Newton, Chief Product Officer

We sat down with our Chief Product Officer, Victoria Newton, to get her thoughts on the importance of digital transformation for banks, new emerging technologies and how to overcome the challenges of big strategic moves.

  • Why is digital transformation important for banks?

Digital transformation is not just an option any more for banks, but a necessity to remain competitive and continue to meet customers’ evolving needs. True digital transformation isn’t just about having an app or migrating to the cloud. It’s about rethinking how you operate as a business and transforming core architectures so that as a bank you are able to continuously improve and adapt.

It’s integral to the longevity of banks. Legacy banking systems were not designed to provide the banking experience that people expect today. Simply changing the customer channels without attacking the core and customer servicing systems cannot deliver the customer experience or low cost to serve that digitally-native banks can.

  • What technologies and innovations are banks using to stay ahead of the curve and maintain brand loyalty? How do these technologies contribute to maintaining a competitive advantage in the finance and banking industry?

Disruptive banks don’t focus on what technologies they should be implementing - they focus on the problems they want to solve. Technology often provides the solution, but sometimes the simplest innovation can make the biggest difference.

Take Starling Bank’s ‘Hide references’ feature, which allows people to hide payment references they receive in a single tap. It’s incredibly helpful for survivors of domestic abuse who are receiving abusive payment references from previous partners that accompany child maintenance payments. The technology isn’t complex, but Starling focused on a real world need and rolled a solution out at pace thanks to its cloud-native proprietary tech platform, Engine.

When banks try to solve problems, that’s when real innovation happens, and that’s what customers are drawn to. The right core platforms and foundations are essential for this problem-solving approach, and we are seeing a lot of banks coming to us at Engine to address this - especially moves to the cloud. Cloud architectures are critical as they allow banks to be able to make the most of technologies like generative AI, innovative subscription services or programs to help bolster loyalty at a channel level with customers.

  • What challenges might banks face when digitally transforming, and how can they overcome these?

Starling is in a relatively unique position in that we have never needed to digitally transform, we have been digital and cloud-native from the start. Now, banks around the world are trying to digitally transform into a model like Starling’s, both from a technology and cultural perspective.

The challenge banks face is to transform their tech stack as well as the culture in their organisation. If banks continue to operate in the same way, with top-down decision making, excessive planning, endless prioritisations, change requests and business cases, they will never make the most of the technology available to them.

Banks also need to be clear on their objectives for transformation. It has to be more than just a cost cutting exercise; to succeed it must bring about a step change in agility, genuine real-time processing and insights right through to the core. And it must improve the customer experience. Such change will require significant investment, and extremely strong leadership that champions the vision and the new culture. If done right it will deliver real benefit to the business and its customers.

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