Why banks need stronger digital foundations

In financial services, digital transformation often means major simplification

digital transformation in banking and financial services
  • Digital transformation starts by organizing internal data and systems in a structured, reliable way
  • Business leaders need a real-time view of the technology that underpins customer services
  • At Lloyds, a single view of data and critical processes improved control, compliance, cost reduction, and employee experience

When I joined Lloyds Banking Group to lead digital transformation programs in 2012, a major simplification effort was underway, making it easier to do business with the bank’s 40 million-plus global customers. Developing end-to-end customer journeys became the focus of the rapidly evolving digital bank.

Today, 250-year-old Lloyds is one of the world’s most digitally enabled banks, accelerating its ability to respond to customer needs. Putting customers first while helping Britain prosper has been the driving message behind Lloyds’ strategy under CEO Antonio Horta-Osorio. It’s an approach that seems more important than ever today.

While the outcomes of Lloyds’ digital journey have been transformational, one key aspect of technology management was clearly missing back in 2017, when the bank’s then-CIO asked me to review the way we managed a complex technology ecosystem that supported more than 4,000 IT applications.

The biggest issue was that Lloyds, like many financial services companies, lacked the ability to coherently and consistently manage IT data. Multiple systems of record worked in data silos and with disconnected reporting. That made it impossible to create a single view of service, architecture, cost, resilience, project portfolio, and other core capabilities. Effective software and hardware asset management was missing, and machine learning and big data solutions to that kind of environment was pointless.

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Of course, Lloyds wasn’t alone. Eighty-eight percent of financial services executives today say that controlling, replacing, and upgrading legacy IT systems is one of their top three priorities, according to a survey by BDO. Many banks maintain highly complex applications running on top of aging on-premise IT infrastructure. Moving to the cloud can help, but without visibility and control, cloud migration quickly becomes a complicated and expensive task.

That’s why every financial services organization that aspires to digitally transform must first gain control of its technology data. At Lloyds, that process took three years, but with a back-to-basics strategy, we finally solved the data fragmentation problem and became a bank with absolute control over its IT environment.

That doesn’t mean things don’t break. But by implementing a single technology-management platform for the enterprise from ServiceNow, Lloyds now has a powerful view of critical business processes and tech infrastructure that supports them. That has led to significant improvements in control, cost reduction, and regulatory compliance, and given Lloyds a foundation for continuous improvement.

Even more interesting has been the dramatic improvement in the work experience at Lloyds. Productivity has replaced frustration; people at all levels of the organization benefit from a single, reliable, and real-time view of critical business processes and the technology estate.

The challenges we overcame along the way made Lloyds smarter, with better control and stronger operational resilience. The COVID-19 crisis, in which the bank has had to relocate more than 100,000 people to work from home, has demonstrated the power and scalability of the platform. After 25 years of managing technology transformation programs across a range of industries, I was so impressed with the platform we used from ServiceNow that I joined the company in early 2020.

Here are a few lessons from my journey at Lloyds:

Focus on business outcomes

When managing digital transformation, discussion can quickly move away from the business to technology outcomes. Making a compelling argument with business executives and the CIO and securing the investment funding you need only comes if you can articulate your outcomes in business terms. When highlighting the benefits solutions can deliver, I would often refer to the six Cs: cost, control, compliance, customer, colleague, and continuous improvement.

ROI on AI initiatives

Breaking down delivery silos

In many IT organizations that employ thousands of employees, delivery silos, architectural complexity, and costs all tend to expand at the expense of control and compliance. Technology solutions must be designed to integrate with the employee and customer view. ServiceNow, as a platform of platforms, is uniquely placed to integrate and allow work to flow between existing systems, driving effective organizational outcomes without having to discard previous investment.

Correcting the culture

Technologists are a protective bunch, and in the financial services industry they have a tendency to hire their own, which makes cultural change challenging. Many have been steeped in a “blame IT” mindset that often characterizes the industry, so they are understandably cautious about collaborating. As a transformational leader, offering win-win outcomes for IT and the business helps to increase trust and foster a collaborative rather than an adversarial mindset.

The human factor

Technology should exist in the service of humans and be an enabler to effective business outcomes. We have a tendency to over-complicate our technology environment, and to allow politics and personal agendas to interfere with what is best for our organizations, our colleagues, and our customers. Being transparent and addressing poor behaviors, in a collaborative way, is critical if organizations are to unlock the potential of digital transformation.

Starting with a common understanding of what you are managing and need to change can help reduce complexity and costs—but only if we are willing to share what we understand with everyone in the organization. Companies like ServiceNow can deliver exceptional technology outcomes, but how we use them and benefit from them is up to us.