The Biggest Challenges Facing Financial Services – Part II

August 20, 2018

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A four-part series originally published on LinkedIn.

Part II: Rethinking Ownership and Control

As we established in our first installment of this series, there is an inherent need to shift our industry’s mindset if we’re to advance our efforts to transform, achieve digital maturity and deliver services in a more customer-centric manner.

Our way of thinking about ownership and control of technology is one such area.

Two of the most contemporary trends and widely accepted practices in enterprise IT are the externalization of technology and the rise of open collaboration. Yet, an overly guarded attitude persists that in order to innovate, banks and FIs must replicate and own what others have done or acquire and assimilate.

This way of thinking may be misguided or at best impractical when taking into account available human resources and relative costs. In Latin America and the Caribbean (LAC), where deep domain expertise is more scarce, assembling and successfully directing a group of vendors to replicate an imported innovation can be fraught with setbacks and costly blind spots.

Also, consider that out of the roughly 300 banks in the LAC region, there may be 10 with the ability to successfully pull off a buy-and-integrate move allowing their organizations to meaningfully transform their tech and tech culture through acquisition.

Therefore, one can conclude that the majority of banks and FIs, would be better off betting on technology partnerships that allow them to leverage other’s capabilities and connective tissues to generate value, preserve customer relevance and learn sooner, rather than to embark on building their own tech from scratch.

Still, the own-and-control mindset is so ingrained that many organizations would still rather spend $10 million and two-plus years with the hope of successfully modernizing their own legacy tech (betting heavily on one option) over spending a half a million to go live on a more flexible platform in months, allowing them to more seamlessly integrate and create customer-centric ecosystems via APIs, for example.

This alternative approach has the added benefit of allowing banks and FIs to innovate gradually, spread risk and invest more over time as initiatives begin to bear fruit and their organizations digitally mature.

The takeaway is that we need to end our infatuation with ownership and control and get better at weighing our organizational readiness to transform against the most precious asset of all – time.

In our next installment, we’ll explore attitudes about experimentation and organizational obstacles to achieving digital maturity.

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