Digital Transformation in Banking: Transforming Financial Services With Incident Management

by Vivian Chan April 7, 2021 | 7 min read

Financial services institutions have been facing pressure to modernize their operations for years. But legacy architecture and processes—along with compliance regulations—have made rapid innovation difficult to achieve. Adding to this pressure are new, digital-first competitors who accelerate the need for financial services to deliver better digital customer experiences both more consistently and at scale.

What Is Digital Transformation in Banking?

Digital transformation in banking requires institutions to adapt and embrace new digital operating models to keep pace in an increasingly consumer-centric world. This means offering online and digital services for customers, such as in-app mobile banking, as well as equipping employees with the technology and tools necessary to keep today’s digitally savvy customer satisfied. Digital transformation in banking also means adopting digital technologies to drive the agility needed to keep pace with the ever-changing market.

For any business managing this huge shift, effective digital operations management is mission critical. This is especially true for financial services institutions as they face numerous challenges—from their reliance on legacy infrastructure, to disruptive fintechs and unique compliance and security requirements.

Examples of Digital Transformation in Banking

Below are some areas of investment and modernization that financial services should embrace:

  • Platforms and Technology: Adopting decentralized cloud platforms—alongside API-first technology that can easily integrate with teams’ platforms of choice—allows institutions to easily access automation, extensibility, flexibility, and auditability.
  • Talent: Empowering talent to “work where they want” and ensuring a single pane-of-glass view of relevant information. Additionally, democratizing practices like on-call rotations, escalations, and incident triage can dramatically reduce responder burnout, as well as improve engineering productivity and retention.
  • Culture: The philosophy of real-time communication and collaboration that the DevOps model encourages can foster a leaner system where bottlenecks are solved in a manner that not only fixes the problem, but also improves the process
  • Process: Improving processes for alerts and incidents can optimize team and service performance as well as improve adherence to compliance and regulatory requirements.

Digital Transformation Challenges

Financial services companies face many unique challenges when it comes to digital transformation, a major one being industry regulations around compliance and security. Financial services is a highly regulated industry, making it challenging to meet heightened customer expectations. For example, when responding to an incident, teams must know which systems are subject to regulatory controls or host regulated data, and must be able to prove all resolution steps were compliant to avoid potential fines. Companies can also face serious consequences for failing to protect the security of systems and customer data. For example, hacked bank accounts can seriously damage customer loyalty, and can even lead to lawsuits and significant monetary loss.

Another key challenge is customer expectations. For today’s digitally-savvy consumers, basic banking is no longer enough, and they demand value-adds like budget help, mobile banking, and 24×7 service availability. Many financial services companies’ infrastructures were not originally designed to handle this. Digital, cloud-native fintechs only add to this challenge. They can quickly bring consumer-ready innovations and products to market through leveraging agile business models like internet-only banking and mobile payments.

Finally, legacy infrastructure poses a major barrier to digital transformation. Many financial institutions still depend on infrastructure that is decades-old and continue to run mission-critical operations on mainframes. This is complicated further by the presence of cloud and other, more modern systems. In some cases, there is also a need to keep both physical and virtual infrastructure running smoothly, as customers expect to be able to access your services at a local branch, an ATM, or online. These requirements make infrastructure management in financial services especially difficult; unlike most other industries, 24x7x365 support needs are not limited to IT alone.

Balancing Digital Transformation With Regulation

To handle these challenges, financial institutions should seek to balance digital transformation and innovation with regulatory needs. Keeping up with the pace of innovation means financial services institutions need to invest in people, technology, and processes to empower technical teams to stay agile and productive.

However, a key side effect of delivering innovative digital customer experiences is increased complexity. As systems and teams get more complex, it becomes impossible to efficiently manage everything in a purely centralized fashion. This can be especially painful when it comes to incident response, because siloed systems and teams can create a domino effect that negatively impacts the customer experience and puts the business at risk.

Accelerating Digital Transformation

Service failure and the real-time work associated with getting it back online is an inevitable part of operating with technology and systems. But how your company responds when that happens makes all the difference when it comes to the customer experience and, ultimately, your revenue.

Spending the time to evaluate what technology signals to monitor, identify which people to engage for what context, and define how processes tie them all together in a coordinated approach are all parts of digital operations management.

The main goal of having a digital operations management platform in place is to intelligently orchestrate a coordinated response to incidents that reduces resolution time and limits the damage and impact to the end customer.

For financial services, digital operations involves several components:

  • End-to-end visibility: It’s vital for any digital business to maintain a holistic view into the health of its IT infrastructure. In financial services, digital operations management tools need to support both modern infrastructure and legacy systems. To quickly triage and troubleshoot problems, teams require a clear line of sight across environments, applications, and services. This allows them to map service dependencies, locate meaningful information within monitoring data, and recognize when multiple alerts stem from a common problem.
  • Built-in automation and context: Optimizing digital operations with a focus on urgent, real-time work makes it possible to identify critical incidents before customers do. Teams that add automation to incident management workflows can benefit from proactive detection of issues, automated grouping of related monitoring alerts, and dynamic routing of issues to the right people. Automation also allows you to standardize and make repeatable processes that would otherwise be error-prone and manual. Automated notifications should be delivered in real time and contain all the critical information required to eliminate context switching and enable rapid remediation.
  • Business-wide orchestration for real-time work: Once it’s determined that a signal is urgent, actionable, and impactful, it must be routed to be fixed as quickly as possible. There are three key components of managing operations in real time:
  • The first is incident response. This helps teams route actionable signals to the right people, at the right time, with full context so they can orchestrate a swift response.
  • The second is full-service ownership, a model where development and operations teams have complete ownership over every aspect of the services they support: from design and development, to production operation, and the eventual sunsetting of software.
  • Finally, collaboration and communication are key to help coordinate incident management quickly between different parts of your organization. For example, software developers and hardware technicians may need to collaborate when responding to a broken ATM. Support personnel may need to notify customers quickly when a service is down. The legal department might be required to assist in responses to issues with legal consequences.

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