This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.
Nachiket Deshpande, Global Delivery Leader, Banking and Financial Services, Cognizant; and Manish Bahl, Senior Director, Centre for the Future of Work, Cognizant.
Banking and financial services (BFS) organisations are using digital technologies to rewrite their future.
Cognizant's research shows that banking and financial services (BFS) businesses stand to gain more by going digital than the cross-industry average. According to the BFS institutions surveyed, going digital has the potential to propel revenue growth by more than 12 percent through 2018. 
There is no escaping the impact of new technologies on work. The basis for competition amongst BFS companies has expanded beyond the traditional arsenal of price, product features, service quality, and branding, to include a new category - hyper-personalisation.
Modernising the middle- and back-office
As companies work towards hyper-personalisation, they will move beyond traditional transactional relationships with customers and embrace a new standard of providing highly bespoke and integrated services. Big data and artificial intelligence will spur this change by helping companies modernise and accelerate the pace of change in the front-office.
What about the middle- and back-office? Today, the back office remains an overlooked cost-savings and modernisation opportunity for BFS businesses.
One of the survey's key findings is that digital costs financial industry firms about 1.3 percent of revenue each year. The outlook is expected to improve only marginally by the end of 2018. This indicates a tendency for BFS decision-makers to prioritise the front office when executing digital programmes.
This rather limited view puts them at risk of missing something significant: the hidden treasure in their middle and back-office. Digital has as much to do with streamlining middle and back-office operations and improving processes as it does with defining the face of the company.
To unlock cost-saving opportunities of digital, the transformation cannot be superficial but must run throughout the business. Customer-centric investments in front-end services will deliver value only if the middle and back-end systems are capable of delivering those services in a sustained and flexible manner.
- Smart operations: Banks looking to reduce human error and get away from the complexity of legacy technology and operations must consider Intelligent Process Automation/AI and deep data mining. Insights generated from middle office data can go a long way in transforming the customer experience.
By applying AI and analytics to business operations data, banks can unlock deep customer insights that can be fed into the front-end functions. For example, experiential customer data and transaction information collected from all stages of customer life-cycle can be leveraged to enhance customer journeys.
Data-as-a-service is another area that can help banks monetise their data assets to generate new streams of revenue and build competitive advantage.
- Modern technology foundation: Over the years, the IT systems within banks have become very complex and difficult to change, limiting banks' agility and competitiveness. By modernising their tech foundation leveraging software re-engineering, back-end refactoring, complex platform engineering and other techniques, banks can turn their weakness into a strength to effectively address the fintech threat. While the approach to legacy modernisation may vary, the journey has to kick-start early to embrace a disruptive future.
Software eating the world is no more a debate. Fintech startups have demonstrated this by rapidly developing sophisticated front-end applications to disrupt the financial services industry.
A major factor enabling them to do so cost-effectively is their adoption of cloud technology. While banks are warming up to hybrid clouds, embracing cloud-native apps can really help them unlock their innovation potential with start-up speeds.
The recent WannyCry ransomware attack highlighted the importance of a secure IT foundation. For a highly-regulated industry such as banking, robust risk and security are critical for maintaining client trust. As new security threats emerge, banks need to rethink their traditional approach towards security from merely a cost function to a long-term investment.
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