10 steps to the 21st century back office

Most digital banking conversations with banks tend to center around channels and customer experience. However, investments in front-office applications will produce limited returns unless accompanied by modernization of middle- and back-office applications and operations, says Sajal Mukherjee, banking transformation leader, IBM.

In an IBM blog Mukherjee suggests ten categories of transformational projects in the middle- and back-office that a bank should explore in order to be able to successfully leverage front-office related investments.

1. Componentized application architecture, along with componentized operating model, that enables the bank to be agile in bringing new capabilities to the market by assembling components of applications, business processes, and related operations.

2. Customer-centric approach in design of the banking processes and operating models.

3. Efficiency moves. Automation of workflows, elimination of paper, and ability to configure operations through business process management.

4. Streamlined operations to eliminate duplication, including establishment of shared services for internal leverage, subject to compliance with local regulations.

5. Recognition of data as a key resource. Information architecture must address both data at rest and data in motion, and this must be complimented by a data governance model that establishes clear ownership of data along with consistent vocabulary.

6. Extensive use of analytics, both real-time and off-line. Embedding analytics in channels enables predictions of the next best action on a real-time basis and helps medium- to long-term decision-making.

7. Moving workloads to cloud to enable increased efficiency and improved speed of innovation.

8. Expanding business value chains by integrating with customers, and providers of complimentary services using application program interfaces.

9. Using IT processes, methodologies, and tools to address the needs for optimization and stability for systems of records, coupled with the need for agility in systems of engagement and systems of insight.

10. Enhancing security to combat the increased threats as a result of a higher proportion of digital transactions.