Tailor a digital transformation, as this mid-tier bank did, for best results

A US-based mid-tier bank needed a step-up in investments in response to competition from large banks and customers’ demand for new products.

The bank took a holistic approach to enabling digital capabilities across all its business lines, technologies, and operating models. Partnering with service provider Hitachi DS, the bank tackled various business cases sequentially within timelines to deliver the impact. Hitachi solved business cases based on their relevance, such as data transformation and automated commercial onboarding, identifying the “why” behind the “what” to drive the bank’s digital transformation.

Forge strategic partnerships with service providers and shift from a traditional staff augmentation offshoring model

Selecting the best sourcing model is daunting, especially for this mid-tier bank that ran a traditional operation with all employees working from an office building. The bank’s appetite for offshoring was limited to staff augmentation to fill capability gaps in software engineering (e.g., commodity IT services). The bank was reluctant to expand its offshoring efforts due to fear of the unknown and perceived need for control.

Initially, the bank explored the Global Captive Center (GCC) route, which could have provided more control to support growth and diversify its product and services portfolio while achieving cost efficiencies and reducing OPEX. However, the bank determined that owning an offshore entity was not economically viable and instead realized it needed a tailored solution.

The bank’s CIO, who had outsourcing experience, felt reassured by Hitachi DS’ ability to give clients control while performing a more consultative role. Based on chemistry, expertise, a collaborative approach, experience, and knowledge, the bank realized Hitachi DS was the right choice to help drive its digital transformation and growth.

Ensure transformation benefits deliver tangible and quantifiable high-impact outcomes

With a clear path to incrementally roll out the digital transformation, Hitachi DS began tackling the bank’s data. Hitachi DS leveraged modern data workloads using Snowflake, AWS, Confluent, and Kafka to manage the data lifecycle. Work included organizing data by definition, owner, lineage, quality, and governance and establishing a golden source of all data within the bank. The new data architecture provides a 360-degree view of consumers, faster and more efficient data access, and synchronous data exchange via APIs.

Other high-impact outcomes included automating commercial onboarding and accelerating it from seven days to near real time. This was a significant improvement, as a 2023 HFS study indicated it takes an average of 32 days to onboard a corporate client. Hitachi DS also deployed and upgraded platforms to provide a real-time experience and played a crucial role as the second line of defense for the bank’s risk and compliance function.

Outcomes that dramatically impacted OPEX were tightly aligned with the transformation strategies. For example, modernizing and supporting the bank’s application architecture saved about 30–40% in build and deployment costs. Also, 24/7 managed services support from the Hitachi DS Application Reliability Center (HARC) delivered about $3.0 million in annual savings.

Enterprises must tailor digital transformation to key success factors

Hitachi DS understood that an all-in enterprise-level digital transformation was not the answer for this mid-tier bank. Instead, the bank needed a tailored approach, focusing on business unit-specific transformations that, while smaller in scope, delivered outsized results. While this approach might have been prudent, the transformation was designed and executed with enterprise-level solutions such as data transformation and application modernization that could be scaled across multiple bank functions and business units. Embracing a mix of targeted, small-scope digital transformations in the bank’s business line with enterprise-level solutions was the perfect recipe for success.

The Bottom Line: Mid-tier banks embarking on a digital transformation journey must choose a service partner that understands and integrates with the bank’s culture.

A one-size-fits-all approach wouldn’t cut it for this mid-tier bank’s digital transformation. Hitachi DS strategized and executed a tailored digital transformation based on the bank’s goal of reinventing itself as a full-service firm.

The Hitachi DS approach is aligned with the bank’s limited outsourcing experience. The bank’s savvy CIO understood the need to break the “always done it this way” mindset, but it took the Hitachi DS team’s ability to build trust with the bank and move the needle on the transformation. The payoff has been a massive improvement in cost reduction, efficiency, and agility.