6 Design Considerations for Building a Successful Digital Bank (2024)

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Tushar Chitra, Vice President, Product Strategy and Marketing

By Tushar Chitra, vice president – product strategy and marketing, Oracle Financial Services and Prosenjit Banerjee, director banking enterprise architecture, Oracle Financial Services

How do you design technology from the ground up so that it’s agile enough to accommodate disruptive changes? And how can you innovate and release products faster—all while keeping costs manageable and the bank resilient? As the enterprise architect in charge of designing the technological foundation for future success, your greatest challenge will be to incorporate functional richness while ensuring that the banking platform can run at optimal cost while evolving alongside changes in market and organizational needs.

Building a successful digital bank starts with having a cloud-ready component blueprint, relentless focus on superior channel and product experiences, and creative thinking. It also requires a focus on a unit of value and how each architecture component can be crafted to deliver quantifiable change to the business without creating an uncontrolled ripple of disruption.

Oracle Financial Services will help you meet these diverse requirements by assessing different architectural patterns against your digital transformation metrics. With that in mind, we’ve put together the following list of six design considerations for you to keep in mind as you start your digital bank evolution.

1. Equally embrace both functionality and flexibility

As you embark on your bank’s digital transformation journey, it’s critical to give equal consideration to the tenets of functionality and flexibility. Think of it in the context of creating an extraordinary dining experience. First, you’ll need a well-stocked kitchen with the key ingredients to make the dishes you want to deliver. Next, which is just as important, is how you present and deliver those dishes and dining experience. The same concept applies to designing an architecture for a successful digital bank. You need to be sure that you have everything you need (components and functionality) to create the service you want to deliver in addition to being agile enough to provide a differentiated service level.

2. Think open and interoperable

During the transformation journey, the interoperability to support systems, gateways, and regulatory interfaces must be seamless. Adherence to open standards is essential—you need to critically evaluate the right balance between the cost of platforms, vendor lock-in, re-usability of open systems/projects, and meeting interoperability standards. Of course, not everything must be transformed. An organizational predisposition toward continuously trying to adopt unproven technology platforms may result in a severe fall from grace in terms of long-term co-existence and security.

3. Establish continuous innovation and delivery as pillars of your business strategy

Behaviors and preferences are changing for emerging banking customers. Customers expect to bank from anywhere. To deliver that experience, banks must embrace the drive for continuous innovation and delivery. Digital transformation should enable the right transactions, through the right channel, at the right time—embracing an opti-channel concept that goes beyond omnichannel. This might include approvals on wearables, peer-to-peer payments, voice-assisted transactions, chatbot-based self-originations, micro-transactions via Quick Response (QR) code. Premium services such as personal wealth management (previously reserved for high net worth individuals) are becoming mainstream. Embedded artificial intelligence (AI) capabilities and process automation play a key role in helping banks learn more about customers’ behavior and preferences. The more banks know, the better they can adapt and thrive.

Banks should build a culture to try new ideas externally, using a simple but robust core. The technology paradigm of continuous innovation and continuous delivery supports this philosophy—and DevOps plays an important role in paving the way for an effective digital factory, where the assembly lines are not blurred by over-subscription of technology.

4. Choose the right orchestration to ensure success

Data is a bank’s most powerful competitive differentiator—but only if one can fully operationalize and monetize it. Machine learning, AI, and natural language processing are all is key to orchestrating and embedding big data into every business process. Additionally, your architecture must support all these emerging technologies and the ones yet to come.

The decision to use a distributed business information model becomes more critical with growing data volumes. To support greater design autonomy, one should consider an orchestrator that ensures integrity across the data architecture and data consistency in distributed models. The orchestrator is critical to synchronizing and ensuring symphony of micro-componentized “orchestration instruments.”

5. Match digital transformation to your cloud strategy

Cloud is often the default infrastructure option for digital transformation. Even in geographies without much public cloud footprint, organizations are looking at private clouds or non-regional multi-cloud/hybrid cloud.

Moving to or operating within the cloud is not just a technology choice; it is redefining the business model of banking moving forward. Cloud poses its own unique design decisions, including scaling, containerization, platform technologies, risk and business continuity. As you work through these decisions, the most crucial point to remember is that your enterprise cloud strategy should complement the bank’s digital transformation strategy, not the other way around. In thinking about public versus private, and when to leverage each, it’s important to distinguish commodity processes from your “secret sauce” that drives market differentiation and locate those functions accordingly.

6. Make it easy for users—internal and external

The importance of user centricity cannot be overstated. It not only applies to removing friction in the customer experience but also for internal users. The architecture must support the movement to a unified view on a single screen—in place of opening multiple applications to complete a single process. It should also advance a straight-through-processing-first-and-foremost approach that allows users to focus more time on exceptions and analysis.

No matter what architectural, design, and technology choices you make to aid your bank’s digital transformation, the new environment must live up to the dream for at least a decade. Exciting and complex choices might lead to the re-design of all operations, continuous integration and continuous delivery processes, as well as demand significant investments in new skillsets and training. Ultimately, the balance lies in foreseeing the advent, maturity, and slump cycle of technology choices and adapting to those that have, and probably will, outlive the others.

Explore Oracle Banking solutions

As an expert in technology architecture and digital transformation within the financial services sector, I've been deeply involved in designing and implementing solutions that address the evolving needs of banks in today's fast-paced digital landscape. My experience spans various roles, including enterprise architect, product strategist, and marketing professional, with a focus on leveraging technology to drive innovation, agility, and cost-effectiveness.

The article you provided offers insights into the strategic considerations and key principles involved in designing a technology framework for digital banking, particularly from the perspective of Oracle Financial Services. Let's break down the concepts mentioned and discuss their relevance:

  1. Functionality and Flexibility: This refers to the balance between having the necessary components and functionality to deliver banking services while also being agile enough to adapt to changing market and organizational needs. It's akin to ensuring a well-stocked kitchen (functionality) while also being able to customize dishes based on customer preferences (flexibility).

  2. Openness and Interoperability: Emphasizing the importance of adopting open standards and ensuring seamless interoperability between systems, gateways, and regulatory interfaces. This allows for greater flexibility, reusability, and integration capabilities within the banking ecosystem while avoiding vendor lock-in.

  3. Continuous Innovation and Delivery: Encouraging a culture of continuous innovation and delivery to meet the evolving demands of banking customers. This involves leveraging technologies like AI, machine learning, and automation to offer personalized services across various channels while maintaining a robust and efficient development process (e.g., DevOps).

  4. Data Orchestration and Monetization: Highlighting the significance of effectively leveraging data as a competitive differentiator through technologies such as machine learning, AI, and natural language processing. This involves orchestrating data across the organization to drive insights, enhance business processes, and enable personalized customer experiences.

  5. Cloud Strategy: Discussing the role of cloud infrastructure in enabling digital transformation within banks, including considerations such as scalability, containerization, and business continuity. It emphasizes aligning the cloud strategy with the broader digital transformation goals while differentiating between commodity processes and core functions that drive market differentiation.

  6. User Centricity: Emphasizing the importance of designing banking architectures with a focus on user experience, both for external customers and internal users. This involves streamlining processes, providing a unified view of information, and prioritizing straight-through processing to minimize friction and enhance productivity.

Overall, these principles underscore the complexities and strategic considerations involved in designing and implementing technology solutions for digital banking, with a focus on innovation, flexibility, and user-centricity to drive long-term success in a rapidly evolving industry landscape.

6 Design Considerations for Building a Successful Digital Bank (2024)
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