How traditional banks are unlocking new digital capabilities

What market need was identified?

A few years ago, the bank management analyzed their digital capabilities and noticed several challenges in areas of customer experience, sales and advisory capabilities, and software implementation and efficiency.

The bank noticed major challenges with legacy infrastructure that did not allow them to build new digital banking capabilities to compete on the regional and global market. Legacy systems are very limited and are often not compatible with new technology solutions, which are in the end, crucial to be able to compete with neobanks in terms of ease of service, speed of transactions and account access via apps.

They decided to unlock new digital capabilities to prevent existing customer to churn and attract new customers by building a new and simple financial service platform to make the lives of their customers easier. This would allow them to create holistic customer journeys through omni- channel experience, real-time, mobile and contextual sales of bank products and extend their business model with 3rd party offerings.

On the technical side, new platform would avoid redundancies, reduce duplication of software implementation, improve performance and reduce cost.

The solution

Building a new system from scratch that supports adding new features, apps and third-party integration and one that reduces maintenance costs and improves overall performance.

Challenges for the client

One of the big conversations taking place in the financial industry is about neobanks and/or challenger banks. Compared to a traditional bank, a neobank (also known as an online bank, internet-only bank, or digital bank) is a type of direct bank that operates exclusively online without traditional physical branch networks.

They’re offering no-fee accounts, a high-speed signup process, intuitive user interfaces and are disrupting the way people save and spend their money – by making products that people like. The growth in digital banking is showing no signs of slowing down.

Convenience, speed and security aren’t just extra benefits in consumers’ minds anymore. They are now a standard requirement of the rapidly changing customer-bank relationship.

As a rule, traditional bank institutions struggle to build a loyal customer base, while the newly emerging digital-only banks have all the attributes of a strong brand and can keep customers both happy and engaged with their product.

Challenges for the tech team

The first challenge was to transform a traditional bank culture into an agile driven organization and empower teams to take ownership of assigned business challenges as well as introduce a more autonomous approach.

The second was building a new platform on an infrastructure running on IBM mainframe-based core banking system and dozens of legacy applications. Building new products and applications on top of it was very hard, slow and expensive.

The team decided to build a new system and use the mainframe just as a tool to access core business system.

Klika solutions

How we did it

1. Introduction of Spotify-like Agile Model at Scale

To get the team going we decided to use a Spotify-like agile model that focused more on behaviours and principles. Before getting Klika onboard, BAWAG had already had started development for a year but with little success. BAWAG needed to stay competitive in the modern world of banking where neobanks (online banks) were already taking over a huge share of the market. To respond to customer and the bank’s needs fast we decided to release products and software sprint by sprint in fully agile mode.

To speed up release cycles we relied on Continuous Integration/Continuous Delivery coupled with other changes primarily in business operations, tech practices and culture.

2. Architecture moved to microservice architecture and domain-driven design

Container managed microservices allowed for more flexibility, building new products and lowering the overall risk.

3. Platform was split into two sets of domain services

First we had the core domain that handled APIs that manage user accounts, payments and loans that can be shared across different apps and channels.

Product domains for implementing services needed for different more specific products like onboarding mobile customers, loans for web customers, etc.

Having previous experience in building similar microservice architecture for traditional and neobanks (like Fidor, Germany, Natixis, Algeria, ADIB, UAE, etc., Klika was part of the core development and quality assurance team and in charge of successful architecture implementation.

4. With the new platform BAWAG was finally able to build seamless new products on top of legacy system

BAWAG’s new platform built by Klika allowed the bank to enhance customer experience, with the new flexible platform and new features build on top of the legacy system.

New services included new mobile banking solutions, better and easier-to-handle personal finances solutions, onboarding new customers quickly online without the need to visit the bank in person and more.

They appreciate values such as status, performance, success, pride and hard work. On the other side, it will allow the bank to build other B2B or B2C web solutions (like consumer or business loans) on the same platform while integrating everything in the same core banking system and keeping everything in one place for easier management, reporting and analytics.

The whole initiative allowed different entities within the bank group to offer new products and services to their customers in respective regions and markets. Everyone is leveraging the fruits of the new platform and bringing new value to the group.

It was quite fascinating and fulfilling to witness and be part of this transformation – traditional bank evolving into dozens of agile product and development squads working together and releasing products on an almost weekly basis.