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Shaping the future of finance

The relationship between process and technical debt

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Many financial processes were created centuries ago. When technology arrived, we automated those historical processes to make them more efficient. We didn’t necessarily focus upon how to make them more effective, as the focus was on how to reduce costs.

Years later, we are paying the price.

The issue is that banks automated old processes for accounting, credit, client onboarding, compliance … well all processes, and put them into structured code on mainframes. As the world developed, the bank did not restructure the code of the processes. As a result, the processes are locked-in.

Now, we want flexible processes and flexible code. We want to be agile and networked. We want to be hip and cool. Thing is that you cannot be agile, cool and flexible, when you have systems that lock you in and handcuff you to a world where it takes more than a decade to change, as highlighted yesterday with NatWest/RBS.

I highlight this issue non-stop as it is at the heart of digital transformation. Some banks have been trying digitally transform for a decade. They’re still trying. It’s hard. The main problem however is when did they start, as some haven’t even started yet.

When you realise that the systems have locked in the processes and the structures and the operations so that they cannot change, then you wake up to the problem. The problem is: what can we do about this? and, if the answer is, it will take us ten years, then the reaction should be: what the hell?

Bank leaders really need to put the pedal to the metal and accelerate digital transformation fast. I’ve seen so many banks changing slow, changing in the wrong direction, misunderstanding what transformation means and doing it wrong.

Transformation to be digital is nothing to do with technology. It starts with customer journeys, employee experiences, processes and internal design. Start with design. Then you layer on top of your designs cloud-based structures, and ensure they are open.

Open, flexible, cloud-based structures based on reimagined process design is critical to digital transformation.

Now, I know this is not easy – I’ve never said it was – but the ticking time-bomb for banks with old structures, old processes locked-in by old technologies and old systems is set to explode this decade. That’s obvious when you have hoards of FinTech designers looking to attack the market.

For me, it’s underlined by what we’ve seen in music. In 2000, most music was sold as CDs; in 2010, it was sold by Apple; today it’s streamed. 83 percent of music consumption in 2020 was through streaming.

You could point to many other areas from Netflix to Amazon and see that in just a decade, the customer journey is different and it is digital.

For a bank to take thirteen years to change a process is ridiculous in the 21st century. You need to accelerate.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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