Digital Transformation of Banking and Financial Services

Technological advances from previous decades have spurred banking innovations that have provided solutions to growing customer needs while improving efficiency and reducing costs.
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Innovation in Finance

The pace of innovation has only accelerated through advances in computing and infrastructure in the last decade, which has resulted in a need for increased connectivity between businesses, customers, and governmental institutions.

While the challenges are many, the benefits of adopting new technologies can transform every facet of a business, especially those willing to let go of legacy systems defined by physical banks, paper money, and borders.

Transforming Operations Through Technology

While every digital transformation will look different, most share common fundamentals that include:

Increased connectivity between employees and stakeholders ensures that everyone is working together towards a united vision. Whether it is at the individual or team level, all team members will be able to collaborate with increased efficiency and productivity.

Traditional business structures and employee hierarchies will make way for environments where everyone can contribute ideas to the decision-making process.

Technology has evolved to include agile cloud-based services that serve an organization’s technological needs from the deployment of software to data storage.  For example, major banks like HSBC have used MuleSoft to innovate their digital platform.

Artificial intelligence (AI) and blockchain technology spurred advances in data collection technologies. Besides offering granular insights into the customer experience, data analytics also benefit internal company operations. MuleSoft has been used to transform the way financial entities handle data.

Going Digital Helps Banking and Financial Institutions Overcome Challenges

The path to digital transformation in banking has many challenges. Some newer financial services companies with tech-focused business models have innovation built into their source code. In contrast, others need strategic planning to catch up and surpass their newly-arrived competition.

The transformation requires planning, foresight, and patience while systems and employees undergo training that helps them unlearn redundant habits and upgrade their skills. Other challenges include:

Increased Competition From Non-Industry Players

The banking and finance space has seen an increase in new players in the digital space like virtual banks and online investment services. Traditional banks are struggling to keep up the pace, and some have turned to MuleSoft to build their digital banking platforms and delight customers with personalized experiences.

Changing Regulations and Maintaining Compliance


The digital transformation is shortening the distances between people, businesses, and government institutions. The resulting regulatory pressures and international political issues are forcing companies to increase focus on compliance and regulation. 

Increased Customer Expectations


Increased computing power and speed have created a new generation of customers with higher demands on their time and attention. This has created a new level of competition among institutions looking to provide the fastest and most efficient services.

Increased Cybersecurity Risks


Cyberattacks are real, and they are on the rise. According to the Boston Consulting Group, the financial services industry is 300 times more likely to be a target when compared to other sectors. 

The solution is better, more robust, and innovative technology that tightens up controls and ensures data privacy for increased security.

Aging IT Infrastructure

Financial services firms historically deployed a sophisticated mix of software and hardware to serve their customers and partners. Rather than building from the top down with connectivity in mind, these systems were built on an “as needed” basis. The result over time has been an increasing challenge to connect some of these systems - particularly those that are not interoperable with newer technologies. 

Disruptive Technologies Make Digital Transformation Possible

The business revolutions of the past harnessed the power of steam, electricity, and computers. The digital revolution of today leverages the internet to augment the power of connectivity through technology.

As a chain of records containing transaction data linked together using cryptography, blockchain technology allows the storing of transaction data that is impossible to change or delete. Use cases for banking and finance include payments, bank account transactions, and market trading.

IoT synergizes the use of devices with the internet to exchange data across a range of systems. The benefits of this technology for the banking and finance sector span numerous areas that include data-based insights into consumer activity, payments processing, and fraud prevention.

AI, a concept used to describe human-like intelligence in machines, has wielded immense innovation across the financial sector from personal banking to trading. Along with improved efficiency and reduced costs, the many uses of AI also include detecting fraud, assessing credit scores, implementing “robo-advisors”, implementing algorithmic trading, and personalizing customer products and services.

Modern banking infrastructure consists of web portals, mobile apps and custom applications in call centers and corporate offices that facilitate secure transfers between departments and institutions. APIs provide the connectivity required for these critical components to communicate while giving access to the right people, protecting data from the wrong people, and preventing security attacks.

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Successful Digital Transformation Brings Multiple Benefits and New Competitive Advantages

Increased connectivity through new technologies such as Mulesoft’s AnyPoint and Cloud Hub integration tools help companies gain multiple benefits across all areas of their business such as:

  • Improved returns on investment (ROI) through increased activity and greater customer retention.
  • Upgraded employee experience with less bureaucracy, better communication across departments, and improved workflow.
  • Improved ability to keep up with new rules, regulations, and compliance demands.
  • Less vulnerability to cybersecurity attacks.
  • Superior customer service through enhanced alignment between customer-facing and back-office employees.
  • Task automation and customized workflows.
  • Increased transparency across the entire organization.
  • Improved efficiency for traditional services such as loans, safekeeping, and everyday banking transactions.

Overcoming Barriers to Innovation Starts at the Top

Digital transformation comes with many challenges and the dominant barriers for the banking and financial services sector are planning and execution. Some key areas to consider include:

Strong Corporate Governance

According to a BDO International survey, 53% of respondents from financial services organizations believe that poor communication is the top barrier to implementing a digital transformation strategy. A lack of vision among leaders was another major concern among smaller organizations at 33%.

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Overhauling Legacy Technology

IT operations in the past used to serve the needs of segmented operations. Today’s solutions require a recalibrating strategy that puts IT solutions at the top. 

A recent study revealed that 70% of respondents believe that current core systems were the main barrier to digital transformation. The solution is to replace legacy systems with cloud-based solutions rather than patching up existing systems with new integrations.

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Digital Evolution for the Banking and Finance Sector

The banking and finance industry has already been disrupted by innovative non-traditional players leveraging technological innovation. Keeping pace with the speed of change is no longer a choice if traditional banking businesses want to remain competitive.

AVIO advises and guides clients through their digital transformation journey with solutions from MuleSoft that help them maximize value with minimal disruption to their existing systems. Our solutions empower financial institutions to enter the digital age with the latest technology that brings agility, responsiveness, and innovation.