Digital transformation has always been an imperative in the Financial Services (FS) industry. Yet this year, banks face new demands in the way that they interact with customers, design and distribute products, and access and consume data.
What does it mean for a bank to digitally transform in 2021, and what technologies are available to financial institutions seeking to implement lasting digital and organizational change?
In this post, we’ll closely examine both of these questions and analyze how banks can leverage MuleSoft accelerators, in particular, to power their digital transformation initiatives.
What is digital transformation?
Digital transformation (DX) is a broad term; its definition can shift depending on industry and technical context. What does it actually mean? And what does effective DX look like in today’s evolving banking industry?
For one thing, digital transformation is multi-faceted; it is so much more than mere financial investment in technological solutions. Lasting, powerful digital transformation—the kind that the FS industry is demanding right now—certainly concerns technology and integration solutions. But it also involves leadership models, the customer journey and experience, organizational culture, an enterprise’s long-term vision, and much more. Effective DX is, in short, a redesign of how a firm does business from the outside in—it reimagines scale of reach and engagement, enables decision-making with data, and provides a seamless meshing of physical and digital experiences.
When done right, digital transformation begins with people, utilizing technology to create the connective tissue necessary to place the customer at the center of every experience. DX can fundamentally change the way organizations deliver their services by allowing them to construct meaningful user journeys based on a deep understanding of customer pain points and their worthwhile solutions. In helping companies build a viable collection of assets, transformation programs can also improve the dexterity of a company to react to threats, grow their bottom line, and drive both short and long-term organizational value.
The banking industry’s core challenges
These are the imperatives for DX that the industry is calling for, but what is standing in the way of banks digitally transforming in this capacity? In the work we’ve done with clients, we’ve witnessed several distinct challenges, all of which boil down to the need to centralize and unlock access to key domains of relevance (i.e data) within an organization.
From a general perspective, many banking institutions often lack a formal layer of governance in design, development, and distribution processes, which leads to consistent, time-consuming rebuilding and customization. Organizations in the banking industry (and other industries, too) also struggle with connectivity—many have complex, heterogeneous environments consisting of both legacy and modern systems that are integrated in numerous ways, often point-to-point. Some institutions simply have no idea how to enable TPX mainframes, for example, to communicate with on-premises .NET systems and cloud-based CRMs like Salesforce in a way that is seamless, visible, and efficient. In addition to these architectural gaps, many banks find it difficult to measure data quality and deliver at-scale solutions.
As we’ve already mentioned, digital transformation is also about organizational change. Thus, outside of these barriers to data integration, lack of executive engagement and buy-in may keep companies from investing in the type of DX programs they need to change the way they interact with their data and their customers. Leaders may understand the theoretical value of DX, but many struggle to make integration a priority for fear of cost and interminable project timelines. This is also related to the role of IT within companies, which has historically functioned as a bottleneck instead of an engine of enablement within an organization.
Yet the urgency for digital transformation is only intensifying. Customers now expect digital banking journeys that are convenient, personalized, and centralized. They seek a one-stop digital shop for their finances, and they aren’t afraid to pivot from one bank to another after a poor banking experience. The key to enabling meaningful digital banking journeys lies in the technical architecture behind these journeys, and organizations can only arrive at that through digital transformation.
MuleSoft and DX acceleration
We’ve discussed the need for digital transformation in banking and common challenges financial institutions face in delivering these programs. What technology platforms and tools address these challenges and power long-term value? There are many integration platforms on the market, but only one that checks all of the boxes we’ve specified for digital transformation done right in Financial Services: MuleSoft.
MuleSoft is a unified product, which centralizes the tooling and framework developers need to take part in any stage of the entire API lifecycle. MuleSoft’s unification allows everyone to be a part of the data conversation, including how data is surfaced, the rules governing data accessibility, and documenting and testing. This contributes to business and IT enablement and collaboration, ensuring that both teams are involved in development projects in a way that serves overall efficiency and effectiveness.
The width and breadth of this API-led platform also addresses the connectivity issues banks are facing, creating an architectural pattern that allows communication between even the most distinct systems and data silos. In providing this architectural solution, MuleSoft can also create a pathway for resolving data quality issues. While MuleSoft is far from a “plug and play” solution—it does require significant custom development—it offers businesses the robust connectors they need to effectively harness and utilize their data.
At Traction on Demand, we also offer MuleSoft accelerators that can, quite simply, accelerate these solutions through the power of reusability. An accelerator is a reusable package of code and configurations that can be implemented quickly in a client’s Salesforce org to set a foundation for specific use-cases. Because our accelerators focus on specific industries, such as Financial Services, they allow our clients to achieve 80% coverage of their desired use-cases in an incredibly short window—so that we can focus the remaining time on high value-add activities.
Accelerators are living solutions, which means we build industry best practices into each accelerator and refine these on an ongoing basis instead of building bespoke processes from scratch every time. Our community of customers get immediate access to every update, democratizing the best approaches and processes for tackling shared problems—and dramatically reducing delivery timelines.
Of course, some might argue that many digital transformation goals can be accomplished with point-to-point architecture. Why should financial institutions seek API-led integration solutions? In short, an API-led reuse model—as opposed to a spider web of spaghetti code—allows businesses to transform faster and prevents them from completing the same work over and over again; utilizing point-to-point architecture is much like hiring an electrician every time you wish to power a new device. We have electrical sockets (like APIs) which allow for easy connections without the need for a professional (like IT). MuleSoft will support a business’s methodology even if it isn’t API-led, of course, yet there is immense value (and overall efficiency) to be found in this notion of reusability.
Traction on Demand and your digital transformation journey
As a MuleSoft partner, we’re eager to help our clients integrate the technology solutions they require to innovate faster, transform their central banking system, and build meaningful digital journeys for their customers. We work with our clients to marry implementation to vision, allowing them to realize projects that drive success and revenue.
We’re also a strong advocate of building outcomes that make sense for our clients and their methodologies using an interactive and iterative approach. Discussing enterprise strategies in a client conversation is always exciting, but our stance is to first work on the problems that drive the most value, because customer success is the core principle of our culture.
You can learn more about how MuleSoft technologies can accelerate your institution’s digital transformation in the MuleSoft CONNECT Session Jumpstart your integration projects with MuleSoft Accelerators.