Digital transformation doesn’t need to be a colossal one-off overhaul—cloud-based core-banking technology enables banks to move at their own pace. This step-by-step approach reduces the cost of curiosity, allowing banks to cherry pick the services they want to modernize and scale more flexibly. In a recent 10x Banking webinar, Chief Product Officer Leigh Pepper was joined by 10x’s Chief Product & Engineering Officer Mark Holt and Confluent’s Vice President of Global Industries Duncan Ash to discuss how banks should manage their migration to the cloud.
Here are six steps that can help banks lay the foundations for future growth:
Going in all guns blazing and attempting to change their entire infrastructure overnight is never going to work. Instead, banks need to take baby steps, says Ash. “Start with something small and then take on something more ambitious,” he says. “Then slowly, slowly work your way through.” Ash calls this a crawl, walk, run-type methodology. In other words, just do a bit at a time.
Have a plan
Banks need to adopt a smart strategy for cloud migration and carefully choose which parts of the system they should migrate first, says Ash. Often, even the most organized banks will misguidedly start off with a big, mission critical system that the entire bank relies on, he says. “Why start with something so difficult? Why not start with something just a little bit smaller and a little bit easier, a little bit lower risk?”.
Demonstrate the benefit
Having chosen a small part of the business to migrate onto the new platform with a clearly defined benefit, banks can take that outcome and demonstrate success to the board, generating further buy-in for the next phase of the transition. “Over time you build more and more experience, and you build more and more credibility,” says Holt. “The cloud enables agile methodologies. You make a decision, you do something small, you iterate.”
Be prepared to fail
Moving to the cloud also requires a different way of thinking. “When you move to the cloud it’s a very different world,” says Holt. “You have to go, ‘We know it’s not reliable, so let’s build all the things around it that deal with the fact that when it does go bang, nobody notices’.” Moving an old legacy system to the cloud can be a daunting prospect. “You have to embrace what Werner Vogel says, ‘Everything fails all the time’,” says Holt. “You have to be good with that.”
Best in class mindset
To embrace this new way of thinking, banks should broaden their talent horizons. “You have to have a brave, diverse mix of people in the organization,” says Ash. While veteran tech staff can provide much needed experience, bringing in younger generations who are versed in microservices and cloud-native tech can help banks better solve for future opportunities. “The best in class doesn’t necessarily come from the same industry,” he says.
Better customer experiences
In this new world, banks should be experts in using data to develop products that can be hyper-personalized for individual customers at a particular point in their lives, says Holt. “That’s what banks should be really good at; that’s where they need to be spending their time,” he says. “Don’t be spending your time on solving infrastructure problems or solving account servicing problems. Spend your time creating amazing customer experiences.”
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