Home Banking Rebuilding Banking for the Post-Pandemic Digital Era

Rebuilding Banking for the Post-Pandemic Digital Era

by internationalbanker

By Bharat Bhushan, CTO, Banking and Financial Services, IBM UK & Ireland





The pandemic has upended a range of apparently immutable certainties. The single biggest societal change has been the reliance on digital infrastructure and connectivity and the adoption of digital self-service channels; lockdowns and social distancing have seen to that.

For the financial-services sector, this digital migration is being hastened by four key factors:

First, increased digital literacy is accelerating shifts in consumers’ behaviours and expectations to easy and personalised experiences across all the services they use, including banking.

Second, there is a need to deliver operational excellence that associates people, processes and technologies in a holistic way while aligning to new sources of revenue and restructuring operational costs.

Third, issues relating to compliance with a range of regulatory modifications have taken place in recent years. One key development, which the industry has also voluntarily initiated in some countries, is the rollout of open banking. It aims to democratise consumers’ banking data and payment facilities in a way that supports the broader ecosystem in creating value-added services. In the long term, these services could help individuals and businesses be smarter in understanding and managing their finances.

And finally, there is growing competition between large technology companies and fintech (financial technology) companies. Most start-ups in fintech build solutions to address a narrow set of needs and gaps, while larger technology companies, which potentially have access to hundreds of millions if not billions of customers, are rapidly embedding financial services in their offerings.

Shifts in High Street banking

Meanwhile, back on High Street, traditional banks face significant challenges to maintain their top and bottom lines. This is partly the result of low interest rates in most economies around the world, driven down by COVID-19 and the rising costs of doing business. In addition, the traditional banking business model is rooted in an analogue era of branch-based product distribution that relied on face-to-face relationships.

This leaves them vulnerable to smaller, nimble digital and platform business models with fewer physical assets to maintain and a much lower overall cost structure. They have been proven able to outpace traditional businesses in a number of key areas, including better customer acquisition and retention rates as well as revenues. Importantly, they boast a high number of daily interactions powered by data, which generate enhanced levels of conversion rates.

Growing demand for personalised experience

A new UK research survey by YouGov1, conducted on behalf of IBM, revealed that younger generations want personalised services and help to manage their money. Sixty-one percent of people aged between 18 and 24 said they wanted their banks to offer tailored support for their finances; 54 percent approved of banks using artificial intelligence (AI) to achieve that goal.

The push for open finance could facilitate these demands using application programming interfaces (APIs)—the connections that enable computer systems and applications to talk to each other. These APIs allow developers to exchange data, send instructions and build systems that use capabilities from a much broader ecosystem of partners and service providers.

Personalisation in the digital era requires transformation

The objective of this type of digital transformation is to seamlessly bring together people (including customers, partners and employees), processes and technology to create a unified ecosystem. For this to be fully achieved without compromise, banks need to address a number of factors.

First and foremost, it is essential to ensure end-to-end security. Understandable concerns about cybercrime and fraud, including identity and access management, need to be addressed and allayed. There are also considerations for regulatory actions, such as GDPR (General Data Protection Regulation), and where data is stored, accessed and processed. Next, to successfully establish an API-first approach, an internal or external developer should be able to discover, subscribe and consume APIs without any manual interactions with the API provider. This enables an end-to-end value chain using straight-through processing. Most legacy systems were not designed with APIs in mind and will need considerable modernisation efforts. This could be done either by applying an API façade or breaking the monolith application into separate and independent business functions.

A cloud-first model enables the bank to exploit new technologies that can enhance user experience—such as selfie-based onboarding enabled by computer vision, a branch of AI. Additionally, as digital interactions generate data, banks can use it to understand how customers interact with and use those products and services. These insights can be employed to finetune the offer and develop new capabilities beyond the scope of traditional banking.

The journey to deliver all this requires a transformation of talent across the bank—from new soft skills and careers, such as product and interface design, to hard skills, such as cloud-based development and operations. In addition, the KPIs (key performance indicators) that measure employee performance will also need adjusting.

Overarching the change and governance processes will be the need to adapt to reflect and accept the rapid flow and iterative change. In addition, establishing partnerships with companies with joint visions and that have proven successful in their own fields and are willing to invest in joint success will be crucial. For example, working with cloud-service providers that have baked-in security and regulatory controls and assurances for financial services will accelerate the journey.

Bringing it all together: a five-point plan

The digital transformation is a journey. As the bank matures in its digital and organisational capabilities, the following five-point plan can help it transition into a platform business:

  • The first step is to develop a clear strategy that identifies the target market and chosen customer group. Specifically, how could the banking services that they need in their daily routines be simplified, automated, embedded or made completely invisible?
  • Start with a smaller number of use cases and learn from them. This allows the bank to test and update new and evolving digital capabilities and learn to utilise enterprise-level resources for scale.
  • Stay obsessed with customers and use data to drive relevant offerings, experiences and interactions.
  • Adjust internal metrics and objectives to match that of a platform business. For example, measure the scale of customer interactions over the average number of banking products sold.
  • Develop commercial relationships with partners, including fintechs, that are willing to share investments and rewards.

Taken together, these steps will help drive and deliver the best possible outcomes in an increasingly demanding environment and market.

An agile, data-driven future

No one could have predicted the pandemic, the seismic changes it would trigger in the daily lives of people around the globe or the impact it has had on accelerating change in the financial-services sector. Fundamentally, the role of banks has shifted from taking deposits and lending money to providing services that are embedded in the lives of their customers.

The financial-services sector is, therefore, having to transform and focus on creating an agile digital-platform model, rich with opportunities for interactions to generate user data that can be leveraged to personalise services, add value to the lives of customers and, as a result, find new sources of revenue.

For the financial-services sector, this is just the first chapter in what promises to be a long story of discovery. The journey to an agile, data-driven future is just beginning, and there is much work to be done.


Bharat Bhushan is Chief Technology Officer for Banking and Financial Services at IBM UK & Ireland. With more than 25 years of hands-on experience in technical-leadership roles across industries, Bharat focuses on the innovations that matter to clients and the society, skills and reputation of the broad IBM technical community to spearhead new opportunities that lead to IBM’s business growth.



1 IBM: “New research from IBM reveals UK banks need to go further to strengthen customer trust in a more digital world,” July 27, 2021.


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