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How a product-driven IT operating model can help reimagine banking

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Moving away from the traditional project-centered approach is essential to meeting tomorrow’s challenges.

In brief
  • The next-gen IT operating model for financial institutions aligns to a product-driven IT and value streams.
  • It provides a customer-centric, innovation-driven way of organizing IT to better meet the challenges of tomorrow.

Aproduct-driven IT operating model can help financial institutions enhance efficiency, increase speed to market, make faster decisions and focus on high-value initiatives. Customer journey operating models are similar to product-driven operating models and are also common in today’s environment. While both models are centered around product and deviate from the traditional project-driven approach, customer journey operating models focus on the end-to-end customer journey. This article will focus on product-driven IT operating models, which allow organizations to reimagine their IT function using products as the foundation for execution of the digital program and elevates their ability to manage their businesses in the modern technological environment.



IT leadership challenges and drivers of change

The banking and capital markets landscape has evolved dramatically in recent years.

The evolution of banking and capital markets can be attributed to the emergence of FinTech firms, growth of software-as-a-service (SaaS) solutions, evolution of customer preferences, and increased regulatory focus on operational resilience. Traditional project-centric organizations are constrained by project timelines, and budget is often predefined when a project’s scope is mapped out, making it difficult for projects to succeed. Several factors drive the need for change.

  1. Customer preferences continue to evolve. The new-age customer is looking for experience, convenience and personalization; trust and transparency; low-cost alternatives; speed of delivery; and lifestyle focus. Companies are leveraging artificial intelligence (AI) to create personalized, value-driven experiences for their customers. As companies adapt to meet these demands, they must continue to consider the overall customer journey, rather than incremental improvement to current processes.

    According to the EY Future Consumer Index, around 80% of customers say the experience a company provides is as important as its products and services.

  2. Nontraditional disrupters continue to make inroads. With their built-in customer bases, deep pockets and strong brand power, dominant technology companies have the potential to take on incumbent banks. To compete, banks are integrating with FinTech players to form a “banking ecosystem.” With SaaS-based solutions on the rise, banks are rethinking their traditional “in-house” model. Hiring managers are seeking business-centric talent to manage new FinTech vendors, causing a shift from traditionally sought-after skill sets.

    According to the EY Future Consumer Index, nearly 68% of consumers are willing to consider a financial product offered by a nonfinancial services firm.

  3. More attention is being directed at current marketplace trends, including enhanced regulatory focus. Focus has shifted to operational resilience, driven by interest in cybersecurity, business continuity and third-party risk management. Meanwhile, sustained momentum continues in key areas such as Basel implementation, interbank offered rates (IBOR) transition and financial crime. Environmental, social and governance (ESG) concerns also constitute an emerging area of reform. Globally, the banking regulatory agenda reflects an expanded scope of supervision, with new or renewed focus on sustainable finance, operational resilience and governance and controls.

What it means to IT leadership

  • Leadership is moving away from a waterfall project approach and prioritizing projects based on up-front project plans.
  • Traditionally, the success of the project has been largely cost-centered and measured based on being delivered on time and on budget. However, now leadership is measuring success on business objectives and outcomes.
  • Companies have started to shift away from funding projects based on predefined milestones at project scoping to allow for allocation based on demand and results.
  • Leadership is now focused on the maintenance and health of the project after it ends.
  • Typically, team members would engage in multiple projects and there was frequent churn and reassignment. However, now there is a shift toward cross-functional teams aligned to value chains.


Key actions for CIOs to mitigate challenges

Today’s environment requires rethinking how IT operates for product delivery and service stability.

A product-centric framework (Figure 1) can guide IT leaders at financial institutions as they transform their functions and help IT leaders drive this important change.

Figure 1: Components of a product-centric IT framework

Product centric components graphic

Define and monitor performance metrics

We’ve observed that structure and defined processes with shorter feedback cycles are required for IT budgeting and investment. Define, measure and report IT functions’ performances in real time based on the outcome of product and service lines. Monitoring IT spend and associated financial aspects has been one of the focus areas for IT leaders.

Key action: Define product-centric objectives and key results (OKRs) to track value of the capabilities and services within the lines of business to achieve desired outcomes.

Integrate suppliers and partners

IT leaders have defined key interfaces and handoffs among different phases of projects to engage customers, partners, IT and shared services teams across the product value chain. Multidisciplinary teams work to prioritize the voice partners and suppliers to understand their challenges and take actions to eliminate pain points.

Key action: Define the plan and process to align partners to the product roadmap early on. Enable service integration and seamless user experience across multiple service providers.

Strengthen governance

We’ve seen IT leaders drive accountability among resources and define the governance model and escalation criteria for fast, effective decision-making. IT leaders should adhere to agile governance and create a foundational hierarchy for decision-making while conforming to corporate policies and regulatory requirements without becoming intrusive to stakeholders.

Key action: Create, maintain, integrate and if required, re-evaluate lines of business with a governance framework that focuses on digital transformation and rapid innovation while driving accountability and adhering to business policies.

Map value streams and processes

Defining and prioritizing business and IT outcomes has typically been the top priority for IT leaders in the banking industry. In our experience, when IT leaders have reorganized around products, services and customer experience instead of functions, they have established a self-organizing, autonomous team that delivers products focused on enhancing the end-to-end customer journey.

Key action: Delivering through IT value streams simplifies the customer journey, enhances the experience, and improves accountability. Establish self-organized, autonomous teams that provide integrated delivery, engineering, and enhanced end-to-end customer journeys.

Rethink talent and culture

IT leaders must focus on creating a versatile workforce with a strong combination of technical skills and business acumen. This means creating a hybrid workforce model that gives people the flexibility to choose when and where they work. To fuel growth and find new talent, forward-thinking IT leaders have partnered with HR and external hiring vendors to develop a strategic approach for scouting, hiring and retaining top talent. IT leaders must enable self-managed teams while rethinking traditional measures of performances.

Key action: Focus the organization around digital initiatives and with the necessary skills to drive continuous product and service development and transform the organization into a digital group that has product-centric operations and accelerates the delivery of digital products and services.

Invest in the right technology, tools and systems

In our experience, IT leaders have focused on developing scalable, resilient and cloud-native technology. This includes transforming product service delivery through intelligent automation that uses operational, machine and user data. Investing in end-to-end security and technology solutions with tangible returns helps remove process inefficiencies, enable innovation, and increase speed to market. Managing tech debt has been another focus for IT leaders using innovative solutions such as automation, best coding practices and using low-code, no-code platforms.

Key action: Ensure digital transformation program through adoption of cloud native technology, automation and AI is on top of the priorities list for the enterprise.



Outcome derived from next-gen IT operating model

Modern IT organizations structure innovation and planning around services and products, not projects.

This structure enables the business to respond to shifting market needs. The modern IT organization is enabled by smaller, cross-functional service/product teams ably supported by centers of excellence. Each team is accountable for changes in its services and products. A strong foundation and integration of people, processes, platforms and data are essential for building modern analytics and automation capabilities and delivering broader operational improvements.

Figure 2: Components of a product-centric IT operating model

Product centric components graphic 02

The next gen IT operating model has eight key features: 

  1. End-to-end Integration with IT stack: Fully integrate the core infrastructure with the entire IT stack. Infrastructure teams and full stack teams including app development should commingle while adopting agile principles across teams. The processes and functions such as information security, IT operations risk and governance, etc., need to be connected across the infrastructure up to the business, development and product delivery lifecycle to drive business value.

    Key metrics: service uptime, reduced number of redundant functions, reduced product delivery time

  2. Customer-centricity: Customer experience is prioritized using tools such as journey maps, surveys and voice of the customer analysis to understand customer needs. The organization also actively monitors customer metrics and service adoption rates.

    Key metrics: increased Customer Effort Score (CES), Net Promoter Score (NPS), Customer Satisfaction (CSAT), percentage of IT spend/value driven on client services

  3. Product/service driven: A service- and product-oriented approach enables positive customer outcomes through operational support and product management.

    Key metrics: reduced operating expenditure, increased profit margin, increased straight-through processing, increased proof of concept/proof of value (POC/POV) to product/process ratio, reduced mean time to resolve/respond (MTTR), increased uptime, reduced cost per ticket, IT spend vs. plan, percentage IT spend on cloud, batch service level agreements (SLAs) met, systems-compliant log

  4. Mindset of continuous innovation: Non-value-add activities are eliminated through continuous business value mapping that enables innovation and through streamlined design authority. Services are delivered rapidly as organizations deploy joint business-tech innovation; create, incubate, and implement iteratively to meet fast-changing business demands; and measure performance on innovative ability.

    Key metrics: increased POC to product ratio, number of incubators, percentage of next-gen skilled workforce, percentage of projects aligned with the organization’s strategic plan and initiatives, meet, or exceed the business case value expectation, percentage of projects aligning to budget, schedule and quality

  5. Hyper-connectivity: Tighter integration among the business, technology, customers and vendors helps counter current limits among assets, customers and the workforce.

    Key metrics: increased lifetime value (LTV), reduced recurring cost, reduced operating expenditure, reduced IT profit-and-loss ratio by business unit, increased straight-through processing, decreased product lead time, percentage of IT spend on run, grow and transform initiatives

  6. Protection: Threats anticipated and approaches built to safeguard the enterprise and stakeholders with end-to-end security and uninterrupted services to customers.

    Key metrics: reduced fraud events, customer complaint rates, priority 1/priority 2 tickets

  7. Effective leveraging of partners and suppliers: Partnerships and flexible tech environments help customers rapidly switch between best-priced services. These arrangements foster minimal viable operating models (MVOMs) to reduce frictional costs.

    Key metrics: increased number of external partnerships, increased number of SLAs met, increased number of product/process partnerships delivered to clients, percentage of applications not covered by external vendor support agreements

  8. Agile workforce: Cross-functional teams and flexible work environments are deployed, along with development programs that support innovation and mobility to execute on projects. Cross/upskilling efforts reinforce customer-centricity.

    Key metrics: increase in agile learning programs (job shadowing, filling cross-functional or new roles) and participation, increase in skills-based learning journeys, reduced attrition and increased development plans and career paths



IT is a fundamental factor in businesses’ ability to deliver products and services.

Today, the modern IT operating model equips more and more IT and business executives to increase resource efficiency and employee engagement, provide an environment to innovate, form new alliances, and improve product time to market from ideation to production. It also reduces cost and run spend, minimize risks with new processes that are standardized and traceable in a landscape that is increasingly complex, from both a regulatory and compliance perspective.

However, many organizations are still struggling with implementing modern a IT operating model. Don’t attack culture and mindset of thinking, which this article provides a structure set of insights on.

Sourabh Ajmera (Manager), Rachel Hayden (Senior) and Teja Dasari (Senior) also contributed to this article.


A product-centric framework should guide IT leaders at financial institutions as they transform their functions to meet the challenges of an evolving landscape.

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