A new approach to banking technology transformation: a Q&A with Brian Muse-McKenney

The payments world is changing. Competition is rising, and customers expect more from their banks and financial institutions (FIs). However, while banks are well-positioned to delight their customers, they have to work within the capabilities of their legacy core technology. Banking cores remain stable and reliable, but they’re often not able to pivot and offer the digital-first experiences that the market demands.  

That’s why banking technology modernization is crucial to make inroads with today’s customers. There’s just one question: how can banks get there? 

To learn more, we sat down with Brian Muse-McKenney, Chief Revenue Officer of Episode Six (E6). Formerly Chief Innovation Officer at HSBC Global Payments Solutions, Chief Executive of PayMe from HSBC, and Vice Chairman of Swift UK, Brian has hands-on experience helping financial organizations modernize to meet changing customer demands. In this discussion, Brian explores the current state of banking technology, the need for cloud-enabled infrastructure, and strategies banks can use to secure their market position. 

Where are banks on their modernization journeys? 

Banks were at the forefront of modern technology starting in the mid-twentieth century. They used the most advanced mainframes and databases to launch innovative products like the ATM, credit cards, and ultimately, online banking. Then there was a game-changing moment around the turn of the century: the advent of cloud computing.  

Many banks have embraced the need to modernize and leverage the cloud. However, most banking cores are still the same monolithic systems that banks used fifty years ago. They do what they do very well, but any functional changes require time-consuming development, integration, and testing cycles. In a highly regulated industry like finance, where security and compliance are paramount, most FIs are naturally hesitant to adopt new technologies. As such, few banks have unlocked the benefits of the cloud at scale, because they're still hampered by their legacy technology.  

What are the benefits of using the cloud? 

The cloud can enable banks to build better customer experiences. Customers don’t want to pick up the phone or visit a branch whenever they want to manage their account. With real-time cloud infrastructure, banks can build fully digital-first experiences that don’t require any human interaction. Not only can this approach provide convenient services for customers, but when done right, it can also cut expenses for the bank by streamlining their operations.  

The cloud gives banks more flexibility in how their products and platforms can address different use cases. They can bring products to market more quickly and cheaply, and embed them in a variety of channels ranging from their own mobile apps to third-party platforms. The built-in configurability of cloud-based and API-enabled technology equips your bank to easily design and launch products that cater to customer needs, helping you secure customer loyalty. 

Can the cloud help banks scale their operations? 

The cloud cuts expenses because you don’t have to run as many applications on your mainframes. Instead, you can scale with your cloud providers. If you’re running your own data center for your bank platforms, you need enough servers to support everyone logging in at once. You have to pay for the full capacity, no matter how many customers are online at a given time. Meanwhile, if those servers are in the cloud, you only pay for the data being used. This allows you to reduce your infrastructure costs, letting you focus on what matters most—building compelling experiences for your customers. 

At the same time, the cloud shortens development times. Rigid legacy systems are hard coded to their initial functionality, which makes it difficult to introduce new products without major infrastructure changes. In modern, configurable cloud-based platforms, however, it’s simple to build new products and bring them to market in a matter of months. 

How can banks start benefitting from the cloud? 

Taking advantage of a new cloud-based platform is crucial. However, just moving your technology to the cloud doesn’t deliver a customer benefit. To support your customers, you need to be developing new products and new experiences. But how can you do that without replacing the core, the heart of the bank? That’s where progressive modernization comes in. 

In a progressive modernization approach, you still implement a modern cloud platform. However, you get to keep your core, and establish the new technology alongside it. You start with one product case and build it on the new platform. This cloud-based system acts as the system of record for the new product’s customers, but you can use straightforward integrations to ensure this customer product data is fed back into your core stack. With this strategy, you can launch new products like virtual accounts and consumer credit cards and get them into your customers’ hands quickly. That way, you can start seeing the benefits—without impacting your core.  

Once you’ve launched this product, you can add one or two additional use cases leveraging your new cloud connections and capabilities. The more you use this platform, the faster your speed to market. When you’re two or three years into this modernization journey and have started seeing clear commercial outcomes, you can consider migrating your core infrastructure piece by piece to your new platform.  

By modernizing progressively, you can de-risk your transformation efforts while also enabling near-term and long-term return on investment (ROI).  In the process, you get the speed and agility you need to create payment products your customers love.  

Learn more from Brian and other E6 thought leaders in the full Progressive Modernization Playbook. If you want to speak with Brian or another member of the E6 team, contact us to learn more.