Enterprise Architecture Transformation Accelerates Digital Finance

By Aaron Tan Dani

Digital technology has created a new world for the financial services institutions out there. Digital banking and mobile payment are no longer foreign to most consumers. Consumers are now more engaging with technology because they have convenient access to the services on their mobile and through other channels. Financial services institutions embark on the digital transformation journey is stimulated by two main factors.

1) To meet consumer demands and 2) the increasing threat from other financial institutions. Implementing digital transformation in financial services institutions is much more complex than it seems.

Figure 1: Banking Ecosystems by McKinsey & Company

Banking ecosystems are extended into three levels and banks should raise past their core as a future growth. Financial institutions have always relied on their products as a path to grow and a secure and seamless IT infrastructure is required to leverage on all three ecosystem levels.

To get a holistic view of the technology throughout the financial institutions, they should establish an Enterprise Architecture Framework. The framework will align IT infrastructure with the financial institutions’ activities. Enterprise architecture improves organisational structure through productivity, agility, product and service timeliness, revenue growth, and cost reduction. Financial institutions need new focus on the functional capabilities to be able to combine amounts of information and hardware to enhance the current capabilities and create new capabilities that can provide new seamless financial services.  Enterprise Architecture can guide financial institutions to get their current IT infrastructure ready for digital future. Architecting for these institutions requires extra effort due to the rules and regulations that they have to adhere to.

Financial institutions are in need of enterprise architecture in the digital IT era because of:

  • 30 years of cycled technology originations– Financial institutions and banks have been around a long time thus making their technology obsolete. Adopting new technology with their legacy systems might cause a risk of chaotic joint technology;
  • Risk averse behavior– In finance, people tend to lower the risk of uncertainty and since digital transformation is a lengthy process, there will be risks. By implementing enterprise architecture framework can assist to ensure business processes with less risks;
  • High need for organising the IT assets– With a more structured IT infrastructure, effective decisions can be made to progress in the digital transformation journey.

Enterprise Architecture should be able to structure and design the data architecture in financial institutions so that it can facilitate access to the fundamental matters (eg: customers and transactions) to create better digital experience. Enterprise Architecture guides these institutions to establish new digital capabilities and assists them to stay focus in order to deliver new set of values.

About Aaron Tan Dani

Aaron Tan Dani, Chief Architect of ATD Solution, President of the Singapore Computer Society EA-Chapter and Founder and Chairman of Iasa Asia Pacific