Canada’s financial institutions are known for being conservative. And you can’t blame them, says Simon Kalechstein, a senior partner with IBM Consulting.
The banks are responsible for an enormous share of Canada’s personal and business wealth. Modernizing is expensive, complicated and risky. Why modernize?
In short, banking customers have growing expectations and expect Amazon-like experiences like product choice and quick delivery. Non-traditional competitors (i.e. fintech, big tech) have been taking share in financial services by providing these best in class experiences.
Industry mandates such as real-time payments demand automation and straight-through processing at a scale that legacy systems cannot match. And due to the war for talent, specialized skills in legacy systems are even more difficult to maintain.
Technology and operations need to modernize to address these forces, and the risks of not innovating are rapidly outnumbering the risks of embracing change, says Mr. Kalechstein.
His role is to work with financial organizations on adopting new technologies, processes and ways of working. That means not only being a technology vendor, but a strategic partner as well, he says, helping financial institutions of all sizes develop roadmaps to deliver this change.
Here, Mr. Kalechstein breaks down why all three are vital to modernizing Canada’s financial institutions.
Why change starts with ways of working
“We see a lot of examples of institutions focused on individual products which are tightly coupled to lines of business and systems; individual teams focused on the traditional ways of organizing,” Mr. Kalechstein says. “You know, ‘I support this product, I manage this system.’”
Mr. Kalechstein advocates that agility can be gained by aligning around end-to-end experiences and preferably, unique to each client’s needs.
This is part of the idea behind the IBM Garage, a method of co-creation where clients and IBM experts work together to collaborate on solutions with speed. The Garage Method uses a ‘minimum viable product’ approach, deploying solutions incrementally – a bit at a time – enabling innovation in an environment that allows for experimentation. “We have used the Garage Method with our clients to quickly deliver business value, and in parallel, help them build new skills. This is starting to have a lasting effect on ways of working,” Mr. Kalechstein says.
The strategic use of technology
“Although there are efficiencies to be gained from replacing systems that have been in place for 20, 30, 40 years, there is also tremendous power in modernizing legacy environments with new cloud capabilities. This reduces cost and complexity, while enabling innovation to better support the business,” Mr. Kalechstein says.
IBM advocates a hybrid-cloud and AI-first strategy, which brings together cloud and traditional on-premise environments through intelligent workflows. “In this context, working in a cloud environment such as the IBM Cloud for Financial Services and IBM Watson AI to build new differentiated client and employee experiences can take advantage of the speed and agility of cloud,” Mr. Kalechstein says, “while at the same time, leveraging the capability of established systems. IBM helps accelerate journeys to the cloud, with hybrid, multicloud solutions to help our clients modernize and digitally transform their technology environments. Our clients look to us as a partner, to help accelerate the digitization journey, work with their cloud providers of choice, and reduce the cost and complexity of the end-to-end technology modernization journey.”
Platform experience key for successful integration
“I haven’t yet seen platforms achieve their fullest benefits,” Mr. Kalechstein says. “There is significant untapped potential in being able to serve each client as segment of one, designing around client needs rather than taking a product-centric approach,” Mr. Kalechstein says.
For example, he says, building a platform that can guide a customer through the home buying experience, rather than simply selling a mortgage. And by doing so, deliver experiences that clients have come to expect with product and services choices that meet their needs.
Ultimately, Mr. Kalechstein points out, success is achieved by modernizing three areas: ways of working, technology, and platform experiences. “As banks become more agile and open in their modernization journeys, their ability to build new products and services and deepen their client relationships is ever-increasing. It is super rewarding, demanding and exciting work.”
Advertising feature produced by Globe Content Studio with IBM. The Globe’s editorial department was not involved.