No Match Found
The rise of digital technology has dramatically affected the financial-services landscape. Businesses now demand that technology provide faster speed-to-market, enhanced functionality, and improved customer experience, while at the same time maintaining or reducing costs. Yet most firms have not kept up, in part because they are still using a traditional, centralized IT operating model. IT centralization has achieved many successes: Chief among them, costs are down and compliance is up. But this model is not adaptable enough or agile enough to support firms as they compete in a continuously evolving digital marketplace.
Many high-tech firms and startups — in financial services and other industries — are taking a different approach, not just decentralizing but integrating technology capabilities directly into the business, with a model that we call capabilities-driven IT. In this model, blended, colocated teams contain all the business, operational, and technology skills needed to deliver a specific capability. These teams can deliver fast, flexible solutions, because IT development is no longer in the back office, but directly linked to the business’s needs, while IT governance and infrastructure services remain centralized to maintain benefits of scale.
Moving to this new model presents challenges. Financial-services firms will have to start thinking about IT as part of the business, rather than a function. They may require an IT reorganization, different governance approaches, new investment processes, and new talent. A complete shift may take years rather than months, as the underlying technology architecture continues to evolve. But the benefits are significant, and the right approach makes the challenge manageable: Think big but start small, in a few carefully chosen areas where capabilities-driven IT can provide fast results and create momentum for a full transition.
Despite the challenges of this transition, for many firms the pressures of the digital marketplace make this move a matter of when, not if — and ongoing changes in underlying technologies may make the shift easier than expected. A clear plan can provide a manageable beginning and create momentum for subsequent stages. These five steps are a good place to start:
The pace of technology change is accelerating, and for the financial-services industry, IT is moving out of the back office. It is becoming a critical means of differentiating how firms go to market and interact with their customers. The business model of fintech firms is based on technology’s centrality to financial services, and these firms are competing in more and more sectors of the industry. Traditional firms will have to match these startups’ nimbleness with technology, or they may fade into irrelevance. Yet many traditional financial-services firms are still applying an outdated — and increasingly unsustainable — IT model that keeps business units and technology in separate silos. By shifting to capabilities-driven IT, firms can dramatically improve their speed-to-market, employee effectiveness, capital planning, and customer satisfaction.
Why not get ahead of the curve, instead of struggling to catch up later?
© 2019 - Sun Sep 26 23:35:17 UTC 2021 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.