Build a Retail Banking Business-Aligned IT Strategy
Success depends on IT initiatives clearly aligned to business goals, IT excellence, and driving technology innovation.
- According to the Management and Governance diagnostic (MGD), finance and insurance organizations rate their IT strategy process as only 64% effective.
- IT does not do a good job of communicating they understand business goals, thus 55% of Finance & Insurance CXOs believe some improvement is necessary and 15% believe significant improvement is necessary.
- IT departments without adequate IT strategies experience alignment, organization, and prioritization issues.
Our Advice
Critical Insight
- A CIO has three roles: enable business productivity, run an effective IT shop, and drive technology innovation. Your key initiative plan must reflect these three mandates and how IT strives to fulfill them.
- Don’t project your vision three to five years into the future. Dive deep on next year’s big-ticket items instead.
- Developing an IT strategy is a wasted effort if no mechanisms are put in place to govern the journey.
- If you don’t communicate it, it doesn’t exist; simple, appealing, and inspirational communication is needed.
Impact and Result
- Establish the scope of your IT strategy by defining IT’s mission and vision statements and guiding principles.
- Perform a retrospective of IT’s performance to recognize the current state while highlighting important strategic elements to address going forward.
- Elicit the business context and identify strategic initiatives that are most important to the organization while building a plan to execute it.
- Evaluate the foundational elements of IT’s operational strategy that will be required to successfully execute key initiatives.
- Wrap all strategic information into a highly visual and compelling presentation that enables easy customization and executive-facing content.
Build a Retail Banking Business-Aligned IT Strategy
Success depends on IT initiatives clearly aligned to business goals, IT excellence, and driving technology innovation.
Executive Summary
IT strategies are often ineffective.
- According to the Management & Governance Diagnostic (MGD), organizations in Finance and Insurance rate their IT strategy process as only 64% effective.1
- IT does not do a good job of communicating its understanding of business goals. Thus, 55% of Finance & Insurance CXOs believe some improvement is necessary and 15% believe significant improvement is necessary.2
IT departments without adequate IT strategies experience issues with alignment, organization, and prioritization.
Three-quarters of surveyed CEOs value tech leaders with experience fostering operational stability and strategic business alignment,3 however…
- The CIO is seen as an order taker by business executives. This usually results in the demands on IT far exceeding the IT budget.
- Projects and initiatives are not prioritized around business objectives. Synergies and dependencies are recognized too late. Projects are often late or put on hold because of sudden changes to business requirements.
Follow Info-Tech’s approach to developing a strong IT strategy.
- Use Info-Tech’s industry-focused approach to discern the business context.
- Clearly communicate to business executives how IT will support the organization’s key objectives and initiatives using the IT Strategy Presentation Template.
- Use Info-Tech’s Prioritization Tool to help make project decisions in a holistic manner that allows for the selection of the most-valuable initiatives to become part of the IT strategic roadmap.
Info-Tech Insight
A CIO has three roles: enable business productivity, run an effective IT shop, and drive technology innovation. Your IT strategy must reflect these three mandates and how IT strives to fulfill them.
1: Info-Tech, IT Management & Governance Diagnostic; n=234
2: Info-Tech, CEO-CIO Alignment Diagnostic; n=62
3: CIO Journal, 2020
Executive Summary: Retail Banking Business-Aligned IT Strategy
Situation: Rapid Changes
The retail banking industry is rapidly evolving. It is being influenced and reshaped by many factors. Customer bases are aging, and younger tech-savvy customers are becoming more important to the business. Nontraditional competitors and fintech competitors are using highly mature digitally native products and delivery channels to compete with incumbents.
As a result, retail banking is changing rapidly, as is the technology required to compete effectively. IT has become an integral part of survival and success, and IT needs to align with business to assure it can support business needs.
Complication: Legacy Tech
While market forces are rapidly reshaping the retail banking marketplace, the technological complexity needed to deliver competitive customer-focused products and services are straining the legacy technology stacks that still make up a large part of incumbents’ technology capabilities.
The market dynamics are causing legacy technology to increasingly become a hinderance to competing successfully.
IT departments are struggling to respond to the wide variety of challenges that confront the business. Historically, IT has had challenges aligning to business needs. This misalignment must be rectified.
Solution: Transformation
Retail banking IT must reevaluate, upgrade, or replace core people, processes, and technologies to assure they can effectively respond to the complex challenges.
- Learn about the fundamentals of your industry, including its ecosystem, influences, opportunities, and constraints.
- Conduct SWOT analyses within the context of your industry, with guiding insights from Info-Tech, to understand unique implications for IT.
- Devise a list of initiatives you can integrate into your IT strategic plan to transform the role IT plays in your organization.
The retail banking industry
What is the retail banking industry?
- The industry is focused on providing financial goods and services to individuals and corporations.
- The goods and services are highly regulated.
- A fiduciary relationship is the cornerstone of the industry, characterized by a high degree of trust expected by the client.
- There is a continued rapid transition (in North America and Europe) away from traditional branch banking to omnichannel and mobile first.
- There is an increasing trend toward globalization.
- Security is an essential component of this industry because of the extremely sensitive nature of the data that the provider holds.
- Security breaches and other events that breach the fiduciary and security bond between client and provider have serious reputational consequences.
- An escalating level of competition from fintech and other non-financial service competitors is rapidly reshaping the industry.
- Artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA) are increasingly being deployed to drive efficiency, increase customer engagement, and drive new product development.
- Criminals and external threats are growing in complexity.
The retail banking environment
- Changing customer demands
- Constant state of change
- AI, ML, and RPA
- Global regulatory environment
- Need for transformation
- Global focus
- Focus on illegal activity
Influencing factors
- Changing customer demands: Mobile and omnichannel service delivery are demanded now.
- Constant state of change: Innovation is being driven by fintech disruptors.
- Growing use of AI, ML, and RPA: These require more data that is accessible and correct.
- Evolving global regulatory environment: Changes are being made that increase customer choices and service levels, such as open banking.
- Evolving global regulatory environment: Growing pressure is being placed on legacy systems, and this is driving an increasing need for significant transformation.
- More global focus: Customer needs are increasingly taking on a global perspective accompanied by anytime, anywhere demand.
- Tightening regulation around illegal activity: Money laundering, terrorist financing, and other illegal activities are increasingly under scrutiny.
Industry facts
- US financial markets are the largest and most advanced
- Financial services drive other sectors of the economy
- US is a center for global banking
Financial services is one of the most important sectors of the economy
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US financial markets are the largest and most advanced.
2018
2020
Finance and insurance % of US GDP 7.4% ($1.5 trillion) 8.3% ($1.7 trillion) -
Financial services drive other sectors of the economy: Financial services and products help facilitate and finance the export of US-manufactured goods and agricultural products.
2017
2019
US exported in financial services & insurance $114.5 billion $151.9 billion - The US is a center for global banking: Investment in the US financial services industry offers significant advantages for financial firms. Before COVID-19, approximately 17% of the Fortune’s Global 500 financial services companies were headquartered in the US (no updated data is available).
Source: SelectUSA.Gov
Retail banking competitive landscape
- Intense competition
- Legacy technology is still prevalent
- Digital disruptors driving competition
Only the agile will survive
- Intense competition: The competitive landscape in financial services is intense. A changing customer base that is demanding new products and services through every channel is challenging traditional organizations to their core.
- Legacy technology is still prevalent: Unfortunately for traditional financial services organizations, their cores are still heavily reliant upon legacy technology that is poorly suited to the current requirements and challenges of the current market.
- Digital disruptors driving competition: New digital disruptors add increasing pressure to an already complex and highly competitive landscape. In many cases, disruptors are not subjected to the same regulatory scrutiny as the incumbents.
Critical challenges in retail banking IT
- Escalating threat levels
- Security risks of partners
- Accessible and secure data
- Demands for innovation
IT delivery for banking through partners and off-premises locations
- Escalating threat levels: Security is an ongoing challenge throughout the entire IT industry, but this is especially true for IT departments within the financial services industry. Threat levels continue to escalate as criminals gain great access to more powerful and broadly distributed hacking tools.
- Security risks of partners: As financial services organizations continue to adopt more externally provided solutions, which are often hosted in the cloud, new security challenges arise. Financial institutions must now consider the security capabilities of their partners, adding a new level of complexity.
- Accessible and secure data: Data is a continuing challenge for financial services organizations. Fintech innovation is heavily based around insights gained from traditional and nontraditional datasets. Financial services organizations need to break down siloed data and aggregate it so it is easily accessible but must still meet stringent privacy and security requirements.
- Demands for innovation: Innovation is an ongoing challenge. Financial services organizations are being challenged for their customers on all fronts. Achieving innovation in a complex legacy technology environment is an ongoing challenge.
Critical opportunities in retail banking IT
- Retention of client trust
- Compliance as a competitive advantage
Assurance of trust and customer confidence
- Retention of client trust: For now, financial services organizations still retain the position of trusted partner with their clients. Their fiduciary responsibility to protect their clients’ valuable data is a key barrier to entry for most competitors. Financial services organizations need to ensure they retain the trust of their clients by assuring secure safekeeping of their most valuable data.
- Compliance as a competitive advantage: Regulatory compliance continues to increase; however, this isn't a bad thing for financial services providers. Stringent and ever-increasing regulatory requirements act as another key barrier to entry. As financial services organizations automate many of the core compliance processes, regulation is also becoming a source of competitive advantage, such as who has the fastest and lowest-friction process for opening new accounts.
Info-Tech’s approach
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Establish the scope of your IT strategy
Establish the scope of your IT strategy by defining IT’s mission and vision statements and guiding principles. -
Review IT performance from last fiscal year
A retrospective of IT’s performance helps recognize the current state while highlighting important strategic elements to address going forward. -
Build your key initiative plan
Elicit the business context and identify strategic initiatives that are most important to the organization and build a plan to execute on them. -
Define IT’s operational strategy
Evaluate the foundational elements of IT’s operational strategy that will be required to successfully execute on key initiatives.
Info-Tech’s methodology for IT Strategy
01 Business Context |
02 Key Initiative Plan |
03 Operational Strategy |
04 Executive Presentation |
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Outputs |
Business Context Information for Step 2:
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IT strategy information for approval:
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Operational Strategy Information for Step 4:
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Executive presentations for:
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Service |
Pre-Workshop Industry-Specific Guided Implementation |
IT Strategy Workshop |
IT Strategy Workshop |
IT Strategy Workshop |
Info-Tech’s methodology for IT Strategy
Blueprint deliverables
The IT Strategy Workbook supports each step of this blueprint to help you accomplish your goals:
Goals Cascade Visual
Elicit business context and use the workbook to build your custom goals cascade.
Initiative Prioritization
Use the weighted scorecard approach to evaluate and prioritize your strategic initiatives.
Roadmap/ Gantt Chart
Populate your Gantt chart to visually represent your key initiative plan over the next 12 months.
Key deliverable
IT Strategy Presentation Template
A highly visual and compelling presentation template that enables easy customization and executive-facing content.
Info-Tech offers various levels of support to best suit your needs
DIY Toolkit
"Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful."
Guided Implementation
"Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track."
Workshop
"We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place."
Consulting
"Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of the project."
Diagnostics and consistent frameworks are used throughout all four options.
Guided Implementation
What does a typical GI on this topic look like?
Phase 0 |
Phase 1 |
Phase 2 |
Phase 3 |
Phase 4 |
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A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.
A typical GI is 8 to 12 calls over the course of 2 to 4 months.
Workshop Agenda
Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889
Session 0 (Pre-Workshop) |
Session 1 |
Session 2 |
Session 3 |
Session 4 |
Session 5 (Post-Workshop) |
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Activities |
Elicit Business Context0.1 Complete recommended diagnostic programs. 0.2 Interview key business stakeholders, as needed, to identify business context: business goals, initiatives, and the organization’s mission and vision. 0.3 (Optional) CIO to compile and prioritize IT success stories. |
Establish the Scope of Your IT Strategy1.1 Review/validate the business context. 1.2 Construct your mission and vision statements. 1.3 Elicit your guiding principles and finalize IT strategy scope. |
Build Your Key Initiative Plan2.1 Identify key IT initiatives that support the business. 2.2 Identify key IT initiatives that enable operational excellence. 2.3 Identify key IT initiatives that drive technology innovation. 2.4 Consolidate and prioritize (where needed) your IT initiatives. |
Build Your Key Initiative Plan (cont.)3.1 Determine IT goals. 3.2 Complete goals cascade. 3.3 Build your IT strategy roadmap. |
Define Your Operational Strategy4.1 Identify metrics and targets per IT goal. 4.2 (Optional) Identify required skills and resource capacity. 4.3 Discuss next steps and wrap-up. |
Document Strategy5.1 Complete in-progress deliverables. 5.2 (Optional) Set up review time for workshop deliverable. |
Outcomes |
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About Info-Tech
Info-Tech Research Group is the world’s fastest-growing information technology research and advisory company, proudly serving over 30,000 IT professionals.
We produce unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. We partner closely with IT teams to provide everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.
What Is a Blueprint?
A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your IT problems.
Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.
Need Extra Help?
Speak With An Analyst
Get the help you need in this 5-phase advisory process. You'll receive 8 touchpoints with our researchers, all included in your membership.
Guided Implementation 1: Elicit Business Context
- Call 1: Discuss business context and customize your organization's capability map.
Guided Implementation 2: Establish the Scope of Your IT Strategy
- Call 1: Identify mission and vision statements and guiding principles to discuss strategy scope.
Guided Implementation 3: Build Your Key Initiative Plan
- Call 1: Assess year-in-review data and evaluate performance.
- Call 2: Discuss diagnostic data results and success stories.
Guided Implementation 4: Define Your Operational Strategy
- Call 1: Identify strategic initiatives and required information.
- Call 2: Discuss how to build your roadmap.
Guided Implementation 5: Document Strategy
- Call 1: Discuss and identify appropriate operational strategy components.
- Call 2: Summarize results and plan next steps.
Contributors
- Luis Ramón Ramos Espinoza, Chief Information Officer, Suramericana
- Kyle Saverance, Chief Information Officer, Coker College
- Scott Ross, SVP Omni-Channel Technologies, Lowe’s Companies
- Max Min, Director, Waterloo City Centre
- Philip D’Aurelio, Development Solutions Supervisor, City of Hamilton
- Michael Dieckmann, Chief Operating Officer, Florida Virtual Campus
- Joe Evers, Consulting Principal, JcEvers Consulting Corporation
- Ken Piddington, Chief Information Officer, MRE Consulting
- 2 anonymous contributors