I’m often asked what I mean by a digital core and how to convince management to buy into it.
What I mean by a digital core is that the bank has made itself cleansed and ready to join the new generation of fintech. It has renewed and refreshed its core systems by replacing them. They achieve this by abstracting the data from their legacy and cleansing it to be independent of the processors. At this point, the bank has agility to replace processors overnight, without the fear of affecting core systems.
This is why I regularly state that digital has nothing to do with channels. Channels are a past century term for sticking lipstick on the pig of legacy systems. You try to make them look pretty at the front-end whilst the back-end is a heap of crap. That just does not work and does not cut it in the 21st century.
This century sees everything real-time, online all the time. You cannot have overnight batch systems that cannot connect in real-time in the 21st century. That is why the creation of a digital core is so integral to getting this right.
Then the question is: how to get management to commit to doing this right.
Most management think of digital as another channel to market. They hear the analysts, consultants and vendors talking about omnichannel strategies and digital channels, so they create a project, install a Digital Bank Leader and invest in deploying the new technologies. They believe the new technologies are all about mobile and tablets and, once deployed, they clap their hands, sit back with a smug smile and congratulate themselves on getting it right. Instead, they should be slapping themselves for getting it so wrong. Rather than bite the bullet and make the big decision to renew the core in order to create a bank fit for the future, they’ve just invested millions in another dead duck.
At this point the Digital Bank Leader gets frustrated, because they get this stuff and can see it’s not going to the right place. He or she has just led a project for the last months that they are passionate about. They’ve ate, slept and drank the digital juice, and they’re high on a vision of a bank that truly has digital at its core. But now they’ve reached the inevitable barrier where the CEO and Executive Management say: “you’ve done a good job, now go away and be a good boy or girl and here’s a much smaller budget to maintain this stuff”.
Don’t you get it? Don’t you realise? We have to refresh, renew, re-energise and replace the core system?
Their bleating sounds desperate. A control grab for power. And so they leave.
Maybe I’m wrong, but I’ve seen a number of good folks who read this blog and get this message run into the wall of management inertia. I feel for you, I truly do.
So go out there and give them all the links embedded in this blog. Tell them that some guy who’s not a vendor, analyst or consultant is telling them that sticking a digital channel just will not do the job. Tell them that if they’re not ready to renew, the bank will wither on the vine.
If they stick to their guns and still don’t get it then leave, for wouldn’t you rather be with a company that seeks a future than one that is happy to decompose?
Here’s to a great year where everyone gets the vision of a digital core and, more importantly, implements it.