Advanzia: the benefits of IT infrastructure transformation

In the era of digital engagement, many traditional or incumbent banks are struggling to keep pace. Their growth has slowed and they’re losing customers to innovative neobank and fintech players who’ve taken advantage of the market gap and responded with hyper-personalized digital offerings. If these banks don’t act soon, it will become more and more difficult to address these problems as they continue to bleed money.

In this blog, we’ll look at the value of an IT transformation, as well as the importance of a value-driven roadmap to this process. Finally, we’ll discuss the journey of Advanzia Bank, a European digital bank that specializes in bespoke credit card solutions. The bank provides an example to help get your bank started on its transformation journey.

Increasing value through IT transformation

IT infrastructure encompasses the hardware and software components that should be working together to power your bank. This includes computers, applications, networking elements, even your operating system and data storage. Unfortunately, many banks apply an “if it’s not broken, don’t fix it” policy which has become a powerful dissuader to transformation. However, we would argue that a system that stifles innovation, drives up costs, and reduces agility is, in fact, broken.

If your IT infrastructure has disjointed elements, no matter how small, it becomes very difficult to provide best-in-class journeys and experiences. But, by utilizing a value-driven roadmap, this seemingly immense task can become quite manageable.

The importance of a value-driven roadmap

Traditional methods would have you consider a technology roadmap, but that’s no longer the right tool for the engagement banking era. Instead, we recommend a value-driven roadmap that will establish the definition of value for your enterprise and its customers.

Backbase value driven roadmap for successful Engagement Banking

To construct this roadmap, your bank must first understand what its “status quo” looks like. This includes an analysis of pain points, inefficiencies, and gaps in strategy, which will help you know where to begin. This is best done in collaboration with an external value consulting team, which will always have a more objective overview of the situation. Together, you can decide on an optimal outcome and start making real progress towards these actionable goals.

Advanzia’s cloud-based operating model

IT transformation is challenging, but not impossible. For example, Advanzia recently replaced its front-end systems while simultaneously updating its outdated legacy back-end systems. By leveraging the Backbase-as-a-Service, the bank created a powerful cloud-native platform. Advanzia went to market quickly and increased the pace of implementation. This yielded real results for the bank that have already made a positive impact on its bottom line.

“We are really targeting to transform these kinds of back-end and back-office processes,” said Linda Früh, Chief Digital Officer at Advanzia. “This new orchestration layer on top of the enterprise platform provides the data and the information to the front end, which then really creates complementary solutions and the new user experience we are aiming for.”

A series of mobile apps were easy to release, once the groundwork had been laid for Advanzia. Rather than constructing each one independently, the bank utilized its unified IT infrastructure to concurrently release four new apps, worldwide.

“[This was possible] because we used the same foundation to provide mobile apps for our co-branding partners,” Früh said. “The technical foundation and the functionality level of these apps are 100% identical. It’s a great achievement.”

As a result of its IT transformation, Advanzia has cut costs and reallocated money into driving innovation. Instead of focusing on daily legacy system maintenance, Advanzia is now using its resources for one of the most important things – delivering real value for its customers.

“All of our customers and clients can benefit from the transformation into new digital and mobile services we are offering,” Früh added.

Advanzia’s recommendations

Many banks can become easily overwhelmed when faced with the scope of re-architecting their IT infrastructure and ways of working. Perhaps your bank has delayed the necessary changes due to the enormity of the task. However, our value consulting team at Backbase has estimated that delaying the implementation of transformation projects can cost financial institutions up to 20% of their return for the year. And the longer the delay, the higher the price.

With that in mind, here’s a few tips from Advanzia to make things more manageable.

Früh noted that breaking things down into smaller tasks was key to Advanzia’s successful transformation.

“We, of course, have long-term strategies and quite ambitious objectives,” she said, “but we were able to package these into small pieces to keep the focus of the people and give our system a clear direction.”

One of the other keys to Advanzia’s successful transformation was outsourcing to third party vendors and partners, including Backbase.

“IT infrastructure is not our core competence,” Früh said. “In the past years, we have seen that a lot of effort is spent on those kinds of activities, but still not that they provide an added value to us, as an organization, but especially to our customers.”

Früh said it was also important to get the entire bank working together in service of the transformation, rather than isolating a single department.

“We are not aiming for having a big bang and working behind closed doors for the next three years, but really involving the entire organization,” she said. “Every single department matters, not only from the IT or production development side, but also from the business teams.”

While there is no single blueprint for success, if your bank can start making progress now, even in bite-sized tasks, while using the strength of your entire institution, you will begin to create real value for your bank in the days to come.