Digitally savvy customers expect more than a classic make-or-buy analysis. Banks should therefore focus on individualized banking directly in the customer's ecosystem.
The challenge is well understood: Today's bank wants to position itself for the future and meet the expectations of its increasingly digitally savvy customers with innovative solutions. This also involves clearly communicating bank-specific offerings and competencies to customers. However, historically grown system landscapes and limited IT budgets make it difficult for banks. So what to do when the classic make-or-buy analysis is no longer enough to reach the goal?
Address customers individually to have a clear advantage
Current business models are increasingly questioned. «One model fits all» may have worked yesterday. Today, a much higher degree of individuality is required. Those who specialize, focus on clearly defined target groups and present relevant performance features that bring added value to the customer have a clear advantage. The expectations of the new generation of customers are becoming increasingly clear. Almost as a matter of course, it requires the same degree of accessibility, interaction and reference to their own life situation from banks as is the case, for example, in social media and on other platforms. A paradigm shift, as the bank is now competing together with old and new competitors for the customer's favor in his «ecosystem».
«Sufficient» is no longer enough
How can a bank prepare for this and what approaches should it consider? Today, a bank’s system landscape typically consists of a monolithic core system and numerous business applications. These often date back to the first wave of digitalization, need to be amortized, and are subject to the bank's internal assessment that they are still somehow sufficient. What may still seem sufficient today is worthless tomorrow at the latest. If a bank wants to be perceived as a relevant provider (and employer) in the future, it has to do more!
The new approach is «individualized banking». It is about ensuring that the bank has access to the customer so that it can easily interact with him at any time – in competition with new market players and directly in the customer's ecosystem. The key here is to be able to present the value of the bank's own offering to the customer. In order to achieve this, the bank has to consciously design a strategic transformation process. When it comes to the resulting question of «make or buy», banks tend to choose the supposedly simpler solution of «more buy (more of the same) with appropriate adaptation of the processes to the software».
Sustain-build-buy – the perfect combination
Meanwhile, the dichotomous «make or buy» approach is becoming obsolete. Today, what is needed is an evolutionary approach that is clearly aligned with the core competencies and the business model of the respective bank. Existing applications can remain in operation and continue to be used in a reasonable manner, even if their function changes under certain circumstances. This corresponds to «sustain». In turn, the most important processes in which the performance is transformed into value for the customer are specifically molded into new software, i.e. «build». This part not only ideally implements the business model, but also contributes significantly to developing new business areas. The technology is thus always tailored to the business requirement. Where tried and tested solutions are available in the market, «buy» makes the most sense. The result of «sustain», «build» and «buy» is a coherent overall concept – the «digital twin» of the bank's strategy – in which all sub-areas work together perfectly.
Align software with business model and core processes thanks to C4 concept
This approach in addition includes AdNovum’s «C4 concept». C4 stands for the combination of the characteristics «client- and competence-oriented» and «collaborative and customizable». These four building blocks form the basis for achieving each target by adapting the software landscape to the bank's business model and its core processes, instead of following a reverse path as before. This opens up completely new degrees of freedom. The relevance of a bank’s offering within the ecosystem of the respective target group increases with the ability to communicate its expertise in a situation-specific manner and to integrate additional elements – e.g. also from third-party providers – in a user-friendly manner.
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