There is hardly a report on economic development without the catchphrase 'digital transformation'. The core message: Those who do not digitize are not fit for the future. However, to seize the real opportunity, it is not enough to replace paper-based forms with their digital counterparts. Rather, the goal should be to question and improve current conditions, taking into account state-of-the-art technology and industry standards.
A successful and sustainable digital transformation must therefore be geared primarily to the needs of the respective stakeholders and the long-term business objectives. The technological foundation should be highly flexible, as both markets and technologies will undergo increasingly rapid change in the future.
In the context of the lending business, this means more than just transferring paper-based documents or Word and Excel templates for a credit application into a digital format. Stakeholders have far greater demands; not least because there are far more technology choices today, which in many cases have already become an integral part of other areas of life. This includes, in particular, the design of appealing omni-channel customer journeys, the utilization of automation potential, and complete transparency of information.
Digital transformation holds enormous potential for banks, especially in the credit sector. Processes centered around credit are complex and intricate. There is often no precise knowledge of their profitability. Focusing on the interests of the stakeholders quickly reveals that, in the current situation, significant improvements can be achieved for all participants through continuous and flexible digitization of credit processes.
Only if the stakeholders recognize clear value for themselves or their concerns will the transformation project in the lending business be successful. Therefore, it is essential to identify the needs of the stakeholders and to consider and combine them in a digital solution approach.
Keeping track of the different interests is not an easy task. The perspectives of the customer, the bank itself and the regulators are just the tip of the iceberg. In the course of implementing a wide variety of solutions in the credit industry, which we specialize in, we have dealt in depth with the needs and can give a detailed overview of them.
Depending on the size and strategy of the financial institution and on the type and scope of the digitization project, the focus is on the interests of different groups of people. In our experience, the following are the main stakeholder needs for digital transformation in finance:
Customer: In the digital age, customers expect transparency, smooth service and an up-to-date product range when handling financial transactions.
Bank Clerk: Whether for routine tasks or in expert mode, the clerk wants to be supported quickly and reliably by the system.
Investor: Above all, investors expect digitization projects to increase efficiency and bring economic benefits for the company.
Audit: Complete transparency and traceability are central to the audit.
Risk Manager: The risk manager requires the system to support him or her in identifying risks at an early stage and making informed decisions.
IT: For the IT management of financial institutions, technical support must be guaranteed continuously from the implementation of a digitization project to maintenance.
The demands of the different stakeholders make for a diverse and comprehensive picture, from the concentration on one's own strengths to the opening up of new ways, all with high transparency and simultaneous security. The technology that empowers financial institutions to meet this challenge should ideally meet all of these needs – without being too complex, too expensive or inflexible.
These considerations lead to the technological approach of knowis: a banking platform as a 'Digital Agility Layer'. On the one hand, this layer facilitates the networking of all existing internal systems from the backend to the channels; on the other hand, it enables the connection of external ecosystems, which provide added value in the form of expanded product ranges and services from partners. By integrating the Digital Agility Layer, financial institutions can leverage four progressive key areas as drivers of their digital transformation: omni-channel journeys, smart solutions, core banking modernization, and API banking.
From a technological point of view, the subject matter should be embedded in the Digital Agility Layer when establishing platform banking so that existing solutions can be integrated seamlessly. It is also crucial for us in digitization projects to speak the customer’s professional language in order to clearly identify the problems, expectations and wishes of the stakeholders. After all, the solution is supposed to solve real and complex tasks in the lending business.
By using Domain Driven Design (DDD), business expertise is becoming the focus of joint solution development. The business domains and their contexts are used as a common, interdisciplinary language to model functional solutions. Misunderstandings between developers and credit experts are thereby avoided.
Within a banking platform, modular solution components whose boundaries are defined by business domains allow for a flexible response to shifts of the market and changing business needs; additionally, they facilitate fast release cycles. The individual components are developed, managed and controlled independently. Although being clearly distinct, they can exchange knowledge and data, providing the foundation for successful business automation and the future deployment of cognitive technologies.
The solutions accumulate to a flexible and powerful credit architecture that can respond dynamically to changes resulting from altered internal or regulatory requirements. This modular approach also pays off in terms of the duration and expense of digitization projects.
In our experience, the solution components marked in the picture are sensible starting points for the structuring and development of a credit architecture – the individual design and the application spectrum of the individual modules remain unaffected. This type of solution configuration using existing solution modules, templates and patterns ensures the necessary flexibility and a short time-to-market.
A consistent and flexible digital credit process brings significant benefits for all stakeholders. From the customer's point of view, this means not just the acceleration of the process flow. By providing different contact channels which access a common data repository (keyword: omni-channel banking), further advantages for the entire customer experience arise:
OMNI-CHANNEL CUSTOMER JOURNEYS ARE THE BASIS FOR HIGH CUSTOMER SATISFACTION.
In the bank's internal view, manual activities within the credit processes play an important role today, such as the search for external data (keywords: commercial register or land value map). Digital transformation therefore offers the following opportunities for employees:
AREAS THAT ARE PARTICULARLY CHARACTERIZED BY MANUAL ACTIVITIES HOLD THE GREATEST AUTOMATION POTENTIAL FOR BANKS.
In order to protect the financial stability of customers, of the financial market, but also of the bank as a corporation, regulators monitor a variety of fields such as accounting, risk management, control procedures, and management procedures. Security is the focus of the regulators:
DIGITAL DATA AND PROCESS MANAGEMENT PROVIDE THE TRANSPARENCY THAT IS URGENTLY NEEDED WITH INCREASING REGULATION.