As banks increasingly focus on customer experience, they are seeking to work around legacy back-office systems that often impede digitized customer journeys. These legacy systems are core systems and thus not easily replaced—a total replacement can be likened to a human heart transplant. Rather than take this radical step, financial institutions are replacing existing services incrementally, over time, thanks to newer technologies like open APIs and microservices.
Two offices defined
Traditionally, the “front office” comprises systems and applications used by customers and customer-facing staff—the side of the bank that directly generates revenue. “Back-office” systems and processes support the front office’s revenue-generating activities and include functions like IT, operations, compliance, human resources, accounting, risk, etc.
In banking, the front office has become increasingly digitized and modernized, while the back office languishes in outdated technology, or worse yet, legacy manual processing. That legacy baggage impedes the larger goal of delivering a customer experience rivaling that of Amazon, Google, and the other “digital native” companies that have set today’s high bar for end-to-end digitized customer journeys.
Gradually replacing legacy services with digitized processes and integrating the front and back offices will enable banks to meet customers’ expectations for seamless, frictionless interactions with their bank and their data. When the front and back offices are separate, each has its own data silo that cannot be accessed by the other office’s programs. Integrating the two enables a holistic customer view so that users within the organization can see all aspects of the customer relationship.
Moreover, bridging the gap between the two offices eliminates—or at least dramatically reduces—the time spent re-entering information and duplicating processes, which can be confusing and frustrating to both customers and employees during customer interactions. Combining the data—or at least making it accessible from both sides—decreases administrative costs, expedites order/request fulfillment, and improves customer service by providing customer services representatives with information when it is needed.
How to bridge the gap
In Accenture’s 2018 North America Banking Operations Survey, a survey of 80 COOs and bank operations executives, almost 40 percent of respondents said that legacy system limitations are among the top three impediments to digital transformation. To work around these systems while avoiding sweeping updates to core systems, many leading banks are turning to open APIs and cloud services to integrate new customer-facing applications and processes with legacy systems.
Xtensifi has helped a number of clients tie together their front end to back-end systems as well as reduce their dependency, with particular experience in using APIs and microservices to do so. Instead of replacing their legacy systems, we have helped these organizations by building complementary systems on and around their existing infrastructure. These newer systems, which have capabilities that the legacy systems lack, are layered on top so front-end applications can take advantage of both the new and old systems. Once they have this layer in place, financial institutions can replace old services incrementally, over time, rather than in a single “big bang.”
If a financial institution is seeking to integrate its back office with its front, it should begin by taking an inventory of the back office to understand what it currently has and to determine which services should be replaced, added, or exposed to the front end. The financial institution should then make a plan for building the microservices needed to connect those services to front-end applications. This effort should always begin with the lowest-hanging fruit. When building anything new, financial institutions should first assess what they have in the back office; they can then begin to expose the services they have and to build the new services they want. As they do so, they embark on a path to deliver the end-to-end customer journeys that, taken together, facilitate the differentiated customer experience banks are ultimately seeking.