Why big banks are quietly adopting digital twins to map their organisations and systems

Why big banks are quietly adopting digital twins to map their organisations and systems

by Douglas Smith, Design Principal and Peter Fossick, Design Principal, Factotum

When you think of a digital twin, most people conjure an image of a 3D model of a Rolls Royce engine, or an animation of a factory floor with robots working away in a Toyota or a Nissan plant, with engineers running performance scenarios and simulations.

In finance, the idea of a digital twin is rather new. Digital twins are, however, quietly being adopted by some large banks to model their organisation, its structure, processes and the complex myriad of IT systems that make up its underlying technical architecture.

Today, many incumbent banks with legacy systems are competing against a plethora of neo banks with born in the cloud apps, that feature data driven customer centric experiences using misco-services that use componentised architectural structures, polished off with a vast array of APIs and all running in the cloud.

Established banks are literally spending ￡100s of millions in digital transformation in a race to compete against these disruptive neo banks as they transition to blended on-premises and off-premise systems, as they seek to modernise their archaic systems to meet regulatory imperatives for enhanced cybersecurity and as they embrace open banking.?

When you sit in on executive meetings of large transformation initiatives, these numbers can easily make one’s head swim. Where is the money actually going? What is the spend actually achieving? Are we spending it in the right place? What results are we actually getting from this investment? And more importantly, where are we wasting money we shouldn’t be??

A CEO of a large bank today has more questions than answers. Despite having access to more data than ever before in their bank’s history, they have fewer insights into what’s happening in different parts of their organisation as they wrestle with out-moded ways of working, silos that do not communicate, as they struggle to embed design led approaches, adopt agile principles or stand-up new technology in a timely way. Meanwhile they are having their lunch eaten by neo banks that are able to entice their customers away from them.

As a CEO of a large bank responsible for running a complex transformation, using a ‘digital twin’ creates that transparency of what’s actually happening in your organisation between your teams, with your customers and crucially, with your multi-million dollar technology systems. A digital twin allows executive leaders and transformation programme management to track initiatives as they come online, and see their results immediately, not after a quarterly report has filtered its way up the email chain.?

When C-Suite need to decide on which systems to prioritise, which departments need to be optimised or which process should be reconfigured, the digital twin allows them to model these changes in advance, run them through the digital twin simulation and view and understand how these changes will impact their business. No more blind decision making. No more guess-work and hoping for the best. These same models(digital twin)? can be used to explain changes within the organisation, creating clarity on what’s going to happen and thereby eliminating the resultant confusion, fear and emotional knee-jerk reaction that comes when teams don’t really understand what’s going on or why it is happening.?

For CIO’s, investing in a new piece of critical infrastructure, or wanting to replace part of your architecture, is a costly exercise in risk management. Using digital twins, CIOs can actually model what the integration of these new systems would look like in advance, have their systems run a simulation of how processes across the entire tech stack will perform with the new system in place prior to spending tens of millions that are needed to purchase and integrate the new system giving them peace of mind.?

Once it’s built, your digital twin then gives you a clear roadmap for how the integration should actually proceed. You’re able to use it to iron out any integration issues, explore dependencies and anticipate in advance any issues before any critical business systems are put at risk.?

The digital twin technology used by Factotum can pull in any real-time data feeds, whether from APIs, systems logs, or even manually entered actions creating simulations in real time of the performance of your systems that can be monitored accurately. Enhanced performance dashboards can be created at any level to report on system components, processes and business performance. Raw system data is translated behind the scenes to translate where feasible, system and process data into financial performance.

Want to know what a ten second disruption to an outsourced facial recognition system will cost you? Just model it in your digital twin and view your c-suite dashboard.

The challenge for traditional banks when implementing a digital twin is often where do you start? Especially if your IT architecture looks like a twisted pile of spaghetti. And the banking processes leveraging it have enough arcs, twists and loops to remind you more of a kids Hot Wheels race track than a modern business process.

At Factotum, we have partnered with the best organisational twinning software provider on the market. We apply the most advanced service design, systems design and business design methods available anywhere today to create accurate models of your organisation, its systems, processes and throughputs. We ensure your dashboards are reporting exactly the data that you need to see when you want to see it. We model every silo, organisational node and underlying system and process by working closely with your teams on the ground.

We bring people together using our highly collaborative and participatory discovery and design workshop activities where we stress define, build and stress test models to ensure agreement across teams and the business. Our engineers then work closely with our IT architects to integrate data feeds, system logs from CRM tools and others involving more manual processes, to ensure that we accurately model your digital twin as we capture all data sets and feeds into the digital twin.?

We then work closely with your transformation teams to map new initiatives and help them create scenarios that they can run across the organisation’s digital twin.

Working with the C-Suite and senior leadership we define a comprehensive KPI framework that links to your OKRs to ensure your reporting is accurate, frequent and actionable using reportable data types on bespoke dashboards. We then build them as layers in your digital twin solution, so you can interrogate them whenever and wherever you want to.?

To find out how Factotum can create a digital twin for your bank or financial institution, contact us today for an informal discussion on 'Digital Twinning as part of a digital transformation initiative - https://factotum.design/contact/