<p>The global banking industry is currently in the grip of a perfect storm of disruption. Every component of the conventional banking model is under stress from the opportunities presented by the shift to a digital economy. Banking leaders everywhere are under intense pressure to conceptualize and implement a cohesive transformation strategy that will reinvent a classic business to thrive in a brand new normal.<br><br>In order to ensure success, every transformation program will have to adopt a dual 'Renew & New' strategy. Banks need a transformation framework that renews current models, processes and systems, while simultaneously adding new capabilities and technologies relevant for digital competence. Based on our experience of working with banks of varying size and technological maturity, we believe there are five best practices crucial to a successful 'Renew & New' transformation.<br><br><strong>Best Practice #1 - Unify and optimize requirements</strong><br>There needs to be a concerted effort to unify, wherever possible, the diverse range of requirements coming from business, at the planning stage itself. In our experience, we have seen that it is possible to unify and optimize requirements focusing on commonality to distil a common pool of changes that can accommodate every requirement. For example, in multi-country Finacle transformations, we have observed that many market-specific business requirements can be fulfilled without deploying individual systems or processes for each geography. Here, we focus on working with the bank's technology and business teams to devise a unified approach to enabling all requirements while reducing the number of changes to be made.<br><br><strong>Best Practice #2 - Industrialize transformation</strong><br>Industrialization refers to the automation of the transformation journey. Breaking down the transformation process into a sequence of steps makes it easier to identify processes that can be automated. Then it's on to drilling down into the details of automation - identifying common processes, assessing what needs to be done, understanding how to improve efficiency etc., with a focus on minimizing manual intervention wherever possible. A well-articulated automation strategy, clearly defined in terms of process workflows, ensures that the transformation process is streamlined and also easily replicated by users. Industrialization played a critical role in Finacle's transformation strategy for one of India's large private sector banks. As a result, in a matter of just over a decade, the bank was able to register a 35X growth in number of branches, 28X growth in number of customers, 52X growth in accounts and 24X growth in internet banking customers, among others.<br><br><strong>Best Practice #3 - Consolidate existing systems</strong><br>Over the years, banks have built up a patchwork of applications, many of which are redundant or superfluous. Several traditional processes need to be completely re-engineered for the digital era. Transformation offers a huge opportunity for banks to rationalize and consolidate their systems landscape. Besides eliminating legacy satellite systems, the focus should be on centralizing operations across product lines to enhance agility and efficiency. Component and API-based banking solutions give banks the flexibility to redesign applications and processes to address changing market dynamics and business priorities.<br><br><strong>Best Practice #4 - Choose partners, not vendors</strong><br>The core focus of transformation should be on business outcomes rather than technology. The engagement model during transformation can no longer be based on traditional vendor-buyer dynamics. The emphasis has to be on building sustainable long-term partnerships that can deliver measurable value in terms of agility, efficiency, customer experience, market share etc. Productive partnerships will be those that go beyond the brief of designing and implementing solutions to actually cooperating on developing new ideas that can deliver unique competitive advantage.<br><br><strong>Best Practice #5 - Strengthen and streamline compliance</strong><br>Creating a robust regulation and compliance framework is a critical challenge in any banking transformation, more so in the context of a multi-country implementation. The focus should not only be on incorporating all essential regulatory requirements into the platform, but also on streamlining compliance across different enterprise layers. Wherever possible, regulatory and compliance processes need to be standardized across business lines and geographies, so that banks can connect the dots across the organization. Finacle's multi-country implementation in one of the largest banks in Africa is enabling its over 9 million customers to bank seamlessly across five countries.<br><br>The overarching objective of any transformation strategy is to create an enterprise framework comprising ofinfrastructure, processes, products and channels,which enables banks to embrace new technologies and innovate continuously. The technology platform must give banks the agility to enter new markets, target new segments, launch innovative products and services. The journey to this preferred end-state is unique to every bank, based on their existing technology architecture and immediate business priorities. But regardless of size, profileor priority, every bank can leverage the aforementionedbest practices to streamline transformation even in the case of multi-country implementations.<br><br><em>The author, Sheenam Ohrie, is head - delivery, support and testing at Infosys Finacle</em></p>
