The rapid growth of fintech firms has created significant pressure to accelerate digital transformation to help achieve business objectives. But most of the effort that goes into digital transformation is focused on customer-facing products and services—only 23% of financial institutions have achieved complete digital transformation.
Complete digital transformation means transforming all aspects of your business, customer-facing and internal, with the help of the latest technology. Complete digital transformation in fintech can be achieved by focusing on the following:
Upgrade your legacy systems and invest in new technologies
Legacy systems cannot match the speed and efficiency of modern technology. Imagine using Microsoft Dynamics CRM 1.0 in the age of Microsoft Dynamics 365—you’d lose out on all the latest features, built-in integrations, and advanced capabilities.
Most business leaders know they need to upgrade their legacy systems but put it off to avoid the challenges of transitioning, which can be addressed with planning.
- Combine new tech and legacy tech. Upgrading mission-critical systems can disrupt daily operations and productivity. Minimize the impact by integrating new technologies alongside existing systems and gradually migrating data and processes. This allows employees to adjust to the new software while maintaining smooth operations throughout the transition.
- Invest in employee training. Train employees to adapt to modern systems, as they may struggle to transition from legacy systems. Investing in training enhances their job skills and performance, facilitating a smooth adjustment to new processes and technologies.
- Choose subscription-based tech. Upgrading software incurs both obvious and hidden costs, including licenses, infrastructure, and the time and resources needed for migration. Cloud-based software with a pay-as-you-go subscription plan reduces migration expenses, while the investment in migration yields improved productivity and performance. Expertise is crucial to avoid costly mistakes and optimize the migration process.
Devtech worked with a hosting company to transition from a legacy billing system to a custom-built automated billing and provisioning system. The legacy system required a lot of manual work, and the company wanted its new system to completely automate all processes from sign-up to ordering of services through its website.
We helped the company build a scalable, automated system that reduced its customers’ ordering time. We also built immediate billing and invoicing capabilities, eliminating the need for manual processes and reducing billing time from three days to under 10 minutes. The investment the company made in upgrading its legacy systems helped it shave more than two days of manual work for each transaction.
Launch a range of new digital products and services
Traditional financial institutions competing with fintech companies can achieve digital transformation and increase customer engagement and satisfaction by launching new digital features. When trying to launch new products and services, there are two major challenges:
- Technology infrastructure and integration. Launching new digital products/services demands a scalable technology infrastructure and seamless integration with existing systems. Begin by defining the necessary technology stack and architecture. Next, create a roadmap for technology upgrades, integrations, and enhancements.
- Market fit and customer adoption. Lack of clarity about the target audience, competition, or customer preferences hinders the alignment of new digital products/services with market needs. Conduct thorough market research, gather feedback, and iteratively refine offerings based on customer insights. Launch an MVP to test the waters before building a full-featured product.
Remember when you had to physically go to the bank and ask for a statement? That changed when banks launched their web and mobile apps, and now you can access your bank statements online 24/7. Now, in the age of neobanks, where some banks exist exclusively online, there’s no need to visit the bank at all. Think along these lines and see which major customer pain points you can address with the help of the latest technologies. Use mobile apps, robo-advisory platforms, chatbots, and AI-powered features to help your customers achieve everything they want with just one visit to your app or website.
Utilize agile methodology for rapid development and delivery
Organizations that don’t use agile methodologies for software development suffer from lengthy iterative development cycles and don’t have the flexibility to adapt to customer needs quickly. Switching to agile methodologies as part of your digital transformation initiatives will help shorten your release cycles and deliver high-quality digital products and services to your customers.
The shift to agile methodologies empowers organizations to embrace flexibility, respond to feedback, and gain a competitive edge in a digital world. However, such a shift is not without its challenges.
- Adopting agile methodology is a major cultural shift. A hierarchical, control-oriented, or rigid culture may clash with the collaborative, iterative, and adaptive nature of agile. Implementing agile practices necessitates a significant cultural shift and a change in how the entire development team operates.
- Your entire software development team will need training. You will need to invest in certification training courses like PMI Agile Certified Practitioner (PMI-ACP) and SAFe Product Owner/Product Manager (SAFe POPM). The entire team taking multiple courses and certification exams will cost money, as well as multiple hours per person every week for at least a month. But this investment is critical to ensure the team can take advantage of new capabilities.
You can address these challenges by investing in certification training courses, educating your team about the advantages of agile methodologies, and bringing in external experts to guide the organization through the transition.
Devtech helped Virgin Trains overcome major roadblocks in building its new cloud platform with the help of agile methodologies. The company’s previous methodology resulted in slow release cycles, which made it unable to turn its MVP into a full-featured product. With the help of agile methodologies, and improvements to the software development life cycle, we accelerated testing and deployment times significantly, accelerated the product roadmap, and built a full-featured, cloud-based platform that performed at seven times its usual speed. If you are not using the agile approach to software development, it should be high on the list of your digital transformation initiatives.
Transition from partial automation to hyper-automation
Hyper-automation means automating every process possible in your organization. With the help of hyper-automation, organizations gain higher operational efficiency, reduce errors, and improve accuracy. It also gives the organization the ability to scale operations rapidly.
With automation technologies and intelligent bots handling routine tasks, businesses can handle increased volumes without significant human intervention. The integration of AI and ML enables systems to learn and adapt, leading to continuous process improvement and increased productivity. Hyper-automation also enables end-to-end automation of complex workflows, eliminating bottlenecks and reducing the time required to complete tasks.
Every company uses some kind of automation. Almost 80% of finance leaders have either implemented or plan to implement robotic process automation (RPA). Even if we put RPA aside for a second, the lead management process in most companies is automated thanks to marketing and sales automation tools. But going from partial automation to hyper-automation has the following challenges:
- Complexity of integration. Integrating various automation technologies, AI algorithms, and existing systems can be complex. You have to deal with compatibility issues, data silos, and the need to redesign or restructure processes to enable end-to-end automation as well as data integration.
- Employee concerns about possible job displacement. Your employees may worry that some job roles will become redundant after you achieve hyper-automation.
You can address these challenges by using a data integration tool (or integration platform) that connects all software systems in your organization. This way, you will have complete control over your organizational data. You can also address employee concerns by reskilling and upskilling them and modifying their job roles in a way such that they reap the benefits of hyper-automation.
Think of an insurance company, where processes such as claims processing and policy administration are already automated. To achieve hyper-automation, the company would need to automate other processes such as claims assessment, underwriting, customer onboarding, fraud detection, policy renewals, and customer communication. That is a long list of processes, and each would require a customized solution.
The company would first need to invest in:
- RPA to automate repetitive and rule-based tasks
- Natural language processing (NLP) to extract insights from unstructured data
- Machine learning and AI to improve decision-making and personalize customer interactions
- Self-service portals and mobile apps to empower customers to manage their policies, file claims, and obtain real-time updates
- A data integration tool to manage all the data being generated by these tools
- Data analytics tools to monitor and measure the performance of its hyper-automation initiatives
As you can see, the above is a complex undertaking where multiple new systems will need to be implemented before you achieve hyper-automation. However, the rewards are worth the investment and effort. By transitioning from partial automation to hyper-automation, the company would reduce the time it takes for them to process claims dramatically, and that will help them improve customer satisfaction and retention.
Transition to microservices for scalable software products
In monolithic architecture, all functionalities are tightly coupled within a single application, and if one thing breaks, the whole app stops working. Microservices architecture promotes scalability and flexibility, enabling organizations to develop, deploy, and maintain complex applications more efficiently.
A microservices architecture is an architectural style in which an application is structured as a collection of loosely coupled, independent, and autonomous services. Each service represents a specific business capability and is responsible for a well-defined set of functions. These services communicate with each other through APIs. If one service breaks, the rest of the app works as usual, giving you time to isolate and fix problems.
Switching to a microservices architecture is a better option for financial services apps because these are feature-heavy apps that need continuous modifications as a result of changing regulations and customer expectations. The following are the two top challenges you may face when switching to a microservices architecture:
- Increased complexity in distributed systems. Managing and coordinating communication between multiple independent services can lead to potential issues like service discovery, network latency, and ensuring data consistency across services. Use API gateways to facilitate seamless communication between services and employ resilient communication patterns such as circuit breakers and retries to handle service failures gracefully.
- Operational overhead and infrastructure complexity. With microservices, the number of services increases. Each service needs to be deployed, monitored, scaled, and maintained independently, which leads to increased operational overhead. Use containerization technologies like Docker and orchestration tools like Kubernetes to automate the deployment and scaling of services.
Though not a financial service, the journey of Netflix from a monolithic architecture to a microservices architecture is a well-documented success story of digital transformation. As the company grew, it realized the need for scalability, flexibility, and faster innovation, which led to the decision to transition to a microservices architecture. To change the architecture of its app, the company:
- Invested in DevOps (automated testing, continuous integration, and continuous delivery pipelines) to enable rapid and frequent releases of new features and enhancements across its microservices ecosystem
- Adopted an agile development approach, where teams could work autonomously and release updates more frequently
- Decomposed its monolithic application into smaller, more manageable services
- Deployed an API gateway to handle authentication, routing, and load balancing and provide a unified interface for clients to interact with the underlying microservices
- Adopted a distributed data management approach to allow services to operate independently without relying on a centralized database
- Implemented containerization and orchestration using tools like Docker and Kubernetes to ensure efficient resource utilization and high availability
Moving to a microservices architecture helped Netflix achieve unprecedented performance and scalability. But changing the architecture of an app is not a small project. So, plan carefully, execute it, and reap its benefits.
Take a page out of LeaseQuery’s book
LeaseQuery, a cloud-based accounting and lease management software, was growing too fast, and its technology processes were unable to keep up. The company identified a need for a major transformation in its software development lifecycle (SDLC) processes and reached out to Devtech for help.
We helped this digital innovator become a digital transformer through:
- Upskilling and knowledge transfer
- Automating the product release schedule and continuous integration/continuous delivery (CI/CD) pipeline
- Implementing a new infrastructure as a code platform
- Migrating its infrastructure to a new automation system for deployment management
Ultimately, the partnership was successful, and LeaseQuery was able to completely transform its processes with the help of new technology. Read the detailed account of how Devtech helped LeaseQuery and see how you can leverage a global partner with deep software engineering expertise to help you in your digital transformation journey.
Don’t wait to act on digital transformation
Some organizational leaders understand the importance of digital transformation but put it off because it’s too big of a commitment. However, in light of our experiences, digital transformation should be prioritized over other projects. Just a few years ago, we were discussing digital transformation with companies that opted to postpone it and prioritize other projects.
Then, the COVID pandemic caused a global lockdown and forced many companies to make major changes to their processes and technology stacks. When some of those same companies returned to their digital transformation projects, they were met with bigger challenges and lots of missed opportunities.
Don’t miss out on the opportunities provided by digital transformation. Contact us to discuss your requirements today.
