14 Dec Integrate for success: how PowerApps can break down silos in financial services
Legacy systems aren’t the only part of financial services heritage holding up digital transformation. The long-standing silos the industry is known for are major organisational and cultural barriers stopping companies from making faster progress and maximising the revenue-generating potential technology can deliver.
Just like the legacy systems so many CIOs are still wrestling with, silos in financial services are a thing. They’re as much a part of the DNA of our banking system as Lotus Notes once was. But while the ubiquitous Notes has now disappeared from sight, silos are definitely sticking around and disrupting the progress and profits to be made from digital transformation.
For their 2020 Industry X.0 research study, Together Makes Better: How to out-collaborate the crisis Accenture surveyed more than 1,500 global senior and C-suite executives to find out how effective their digital transformation programs are in generating revenue. What they found was discouraging to say the least. On average, companies are experiencing around half the revenue increase they expect from investments in digital with actual revenue growth coming in at 6.5% compared with a modest target of 11%. Worse still, almost two thirds (64%) of companies are achieving no lift in revenue as a result of their extra spend on digital projects.
Even in ’normal’ times, a lack of collaboration on complex challenges like digital transformation can cost organizations ROI and future revenue growth. In the time of COVID-19 and economic downturn? The age-old silos problem could be disastrous.
Accenture, Together Makes Better: How to out-collaborate the crisis
This comparison of the average with the majority, shows just how wide the gap is between those who succeed and fail in delivering on the potential of digital. As the report goes on to show, cross-functional collaboration is the X-factor for those few companies who are nailing it. This spells trouble for financial service businesses who have long relied on vertical product and business structures and functions. In such a complex, compliance-fuelled operating environment, collaboration and innovation just don’t stand a chance.
How silos hold up digital adoption
Here at Eighty20, we’re familiar with how this plays out in financial services companies, as well as other sectors. When we start working with a business, the silo status quo and the challenges it presents are a challenge we’ll have on our radar. What we’ll often see is different departments drawing on the same data to solve different problems or create new opportunities. As each team is doing this is isolation, there is no leveraging capability and the business is throwing dollars away developing discrete solutions from the ground up every time.
Put simply, silos cause duplication of both effort and cost, which is a major reason why investments in digital deliver such limited returns across all sectors. If we take a closer look at financial services, and banking in particular, we can see how the silo structure causes a company to haemorrhage money, even before they start to ramp up their digital efforts.
Banks run their portfolios based on a program framework, using governance tools and a control board to manage money and risk. On paper it looks like a system that should run like clockwork. But in practice, it’s disjointed and creates a friction-filled operation that costs the company dear in both dollars and time. The many business units that support both internal and external customers must work in tandem with this core money management function, so these points of friction have impact on overall resource efficiency.
Like so many other businesses, many financial services companies have been making moves towards business agility to accelerate product development, respond to change faster and improve quality of output. But we’re also seeing these efforts frustrated by the silo effect. For a company to truly seize the advantages of both business agility and digital, they need to somehow decompose their vertical structure to an ecosystem, where talent and ideas can flow across core functions to support both efficiency and competitive advantage. It’s a bold vision but as the Honourable Anna Bligh AC says, one that companies need to embrace if they are to thrive in the decade to come.
The most successful banks will have been those who addressed legacy systems, invested in talent and fostered innovation. I expect that by 2030, banks will look more and more like technology companies.
Anna Bligh, CEO, Australian Banking Association
KPMG, 30 Voices on 2030: The New Reality for Financial Services
What a silo-busting strategy looks like
What if there were a solution that even the most stubbornly siloed financial services firm could use to seed their new digital ecosystem? One that actually breaks down barriers to co-operation and progress. Plus it’s cost-effective enough to present as a seriously attractive investment, with the potential to bring benefits and bottom-line savings to support functions like HR as well as delivering on innovative ideas for products and services for customers.
For companies that have struggled in the past with a secure, scalable and effective rollout of digital solutions across their whole business, the new Power Platform suite from Microsoft is a game changer. As a truly distributed model for digital development it offers building blocks that empower business users to fast track technology solutions and achieve business outcomes far more efficiently. As the Power Platform comes with the required governance built-in, compliance and organisation wide standards can be easily applied during this rapid development process.
By creating components from a single source and opening these up to your whole organisation, you’ll also save big on cost of procurement as well as increasing speed of delivery. Plus you keep control of your whole development platform with an existing provider, giving you peace of mind that speed to develop doesn’t come with any sacrifice to security and compliance.
All in all the Power Platform presents as a pretty compelling package, particularly for any business that’s waiting on a major legacy system upgrade to reinvent their whole technology strategy. It introduces the option to start fresh with a solution that’s built to work with other standard platforms and apps like Sharepoint, Office and Teams for simple application. It’s also flexible enough to integrate with your core systems to fill a potential gap for more complex application scenarios.
Showcasing the value of a progressive IT function
With its potential to deliver quick wins for internal app development ahead of a major IT system overhaul, it’s no wonder so many major financial institutions in Australia already have a Power Platform strategy in train. To fully realise the potential of the platform, these strategies must consider the business case, adoption approach and capability uplift required in order to maximise impact and value creation for the business.
Creating the capability to create and deploy technology throughout an organisation might seem to be a threat to the perceived value of the IT function. But we are already seeing many IT functions in financial services using their Power Apps strategy as a way to add significant value to the business and secure their position as strategic enabler across operational silos. When you consider what IT team members could be doing if they were no longer stuck in the weeds delivering micro services and the challenges of architecture and cyber to individual business units, this threat becomes an opportunity. They can focus on goals that represent far greater value to the business such as managing cybersecurity risks and keeping a closer eye on alignment between the strategic direction for technology and the business as a whole.
The benefits of bypassing silos for effective digital transformation have even wider implications, both for culture change and more efficient use of talent across the board. The other side to this newfound independence for digital development is the chance to create cross-functional PowerApp communities. This too can see business units more easily add purpose-built AI and automation to their own resources, freeing their people to focus on higher order work instead of routine tasks.
With a strategic adoption of PowerApps capability, supported by an expert provider you’ll be sharing digital intelligence across teams and giving your people the freedom to level up their contribution to your most important strategic outcomes. Not only is this a win for working effectively across silos it also supports a talent retention strategy that seeks to deliver new skills, variety and career progression to your best and brightest.