Case Study

Can core platform modernization position a bank for future success?  

A regional bank embarks on a transformation at scale to simplify business processes, harness foundational technology and upskill its people.

The better the question

Can a regional bank profit through core platform modernization?

Transformation yields new business capabilities, scalable new technology and an upskilled workforce.

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Many banks are adopting initiatives to modernize their core technology platforms as they try to remain competitive with their peers, keep pace with other FinTechs and maintain a high level of trust with their customers. By embarking on this journey, banks stand to gain competitive, operational and savings advantages to serve their clients and continue pursuing growth strategies during challenging times. 

The key to a successful journey is starting with a proper roadmap that follows a specific business case. This allows banks to view a core modernization effort as a business-led transformation, rather than just another system implementation. This approach is a critical step for building a new technology platform that will achieve long-term value.

A regional bank, which was ready to launch a large-scale five-year transformation to modernize its platforms, knew it needed to develop a business plan that would enable it to achieve its overarching objective of delivering new business capabilities that fit its criteria for using modern technology. It needed to involve a scalable architecture while also providing training and hiring support to align its current skills with those needed for the modernized technology stack.

The bank also wanted to:

  • Increase speed to market and simplify existing processes
  • Enhance availability of real-time data to enable better informed business decisions and provide insights to improve customer experiences
  • Introduce new technology and product features to the market faster through decoupling from monolithic applications and deploying reusable services
  • Reduce operational costs through increased efficiency in data production and consumption

In addition, core modernization would also help the bank strengthen its risk management profile by putting automated controls in place and providing auditable, scalable new technologies for auditors and regulators.

For help on this multiyear, business-led transformation program, the bank engaged Ernst & Young LLP (EY US) as its strategic integrator. EY US is now working closely with the bank as it delivers transformation across the bank’s people, products, processes and technology. The team of EY US professionals brings deep experience across the bank’s priorities, with knowledgeable practitioners and significant domain experience, assets and accelerators.

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The better the answer

Adopting a future-back mindset to drive long-term success

Approach enables the bank to avoid designing technology that supports only the current portfolio.

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At the start of the engagement, the EY professionals on the team determined that leveraging a future-back approach would enable the bank to drive long-term value creation by challenging the assumption that the products offered today would still be relevant in two to three years.

 

Working closely with the client, the EY team is helping the bank build an inventory of business objectives and guiding principles to drive future state decisions. This spans the following four critical pillars for success:

  • Product delivery: define future state products to meet customer and market demand
  • Process automation: develop leaner and automated future state business and technology processes that significantly minimize manual processes
  • Technology modernization: deliver modern architecture that is service-oriented and cloud-ready and enables out-of-the-box capabilities of new core platforms
  • Talent management: deliver short-term and long-term workforce strategies to upskill bank employees throughout a transformation journey of five years or more, as well as post-day one operations

 

The bank’s future-back approach aims to help it avoid designing technology based on its current product portfolio, which is a common pitfall in transformations of this size. This tactic minimizes the technology debt on legacy applications and core platform customizations.

 

Noteworthy deliverables will include the following:

  • Create a broad capability taxonomy that extends across the bank’s consumer line of business
  • Develop a set of guiding principles to govern architecture and business decisions for the program
  • Design a holistic architecture approach across business, application, integration, infrastructure and data architecture
  • Deploy a change impact tool to enable more consistent data quality and create a foundation for the team to better visualize change trends across platforms
  • Establish a data exchange marketplace that allows users to create and search for data products
  • Introduce reusable domain services (application program interfaces) to onboard accounts to the new core platform
  • Reduce regression execution time from over 4 hours to 15 minutes through the strategy and execution of the bank’s first test automation process
  • Help deploy the bank’s new enterprise identity solution to reduce current state identity and access management complexity
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Strong foundation will establish holistic solution architecture

Repeatable approach facilitates model bank capabilities, enabling reusable services.

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Going into this engagement, we knew the client wanted to focus on foundational components at an early stage of the project so that each new core platform could be implemented over a five-year period. This would enable the bank to deliver common capabilities by using a standard set of guiding principles, design patterns, process optimization opportunities and solution architecture.

The client also wanted these foundational components to be defined within the first phase of the journey and agreed upon by all: the client, solution vendors and EY US.

Our broad delivery toolkit is helping to minimize common pitfalls observed within the first six months of a transformation of this size. Our teams are adhering to a common methodology aimed at driving sustainability at scale. Sustainability requires a transformation-first approach, which EY US seeks to deliver through integrated delivery and alignment with the business case.

This approach incorporates:

  • Process improvements aligned with vanilla implementation of the vendor applications, which bring the product to the bank with no customizations at this stage
  • Aligned KPIs and nonfunctional requirements to support process improvements and realization, e.g., bank staff will be able to open an account by navigating through fewer screens using one application compared with the prior process that required navigating across multiple applications
  • Integrated compliance risk and controls focusing on automation that aim to lower costs, which entail moving a significant number of controls from detective to preventive and using automated controls to eliminate risks

EY US and the bank are currently completing the first phase of this five-year journey. Ultimately, the bank will be poised to maintain its existing customer base as it expands into new regions. Its new technology infrastructure will help the bank accelerate the introduction of innovative products into the market. This will vastly enhance the bank’s ability to improve the overall customer experience. All of these are critical steps for the bank as it tries to grow its business in a difficult business environment.

Moreover, the trust and open communication the project fostered between EY US and the bank will also serve as a foundation for the two organizations to team on future efforts. 

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