The hidden value of business architecture In Financial Services

As a business architect at digital delivery firm Axiologik with 21 years of experience in the Financial Services industry, Graham Self, is often asked, “What is the true value of business architecture?” In today’s climate of providing hyper-personalised financial services in a heavily regulated environment, business architecture is a role that has never been more vital to the industry. Here, Graham explores why that is.

In the UK, many financial organisations are currently operating under the Operational Resilience regulations, with a deadline of March 2025 for complete compliance for important business services. And Europe is following fast with the Digital Operational Resilience Act (DORA) regulations, as are many other markets with their own set of legislation.

The intention of these regulations is not simply to ensure that financial institutions perform the minimum criteria for regulatory deadlines, but to make sure that an operational resilience practice and mindset is embedded within organisations for the future. This requires full transparency across the business, from processes and people to technology and data. But who in the organisation has this level and breadth of knowledge?

Change in a traditional industry

Adding to these challenges with compliance, the financial services (FS) industry is also going through a time of significant change, with continued investment in digital transformation. Decisions about technology are being made against a strategy to reach more customers digitally, more personally, and through “banking as a service” partnerships.

But all of this change is happening within a hugely regulated environment that sensibly mandates operational resiliency in many markets of the most important business services to customers. All changes must, therefore, be relevant and validated against robust business continuity controls.

Those who operate in the industry have an obligation to customers – and the market – to provide a trusted, resilient and reliable service at all times. To deliver on that commitment requires financial organisations to not only know what services to deliver to their customers but how to provide them – not only that but to provide them well, on an ongoing basis, and in all circumstances.

Managing the strong – potentially competing – forces that exist between strategy, technology investment, customer experience, operational efficiency and resiliency requires a discipline that has never before been so important; business architecture.

Connecting the ‘what’ and ‘how’

Business Architects have the unique advantage of collaborating between business units, technology and operations teams. These groups of stakeholders historically have their own visions and perspectives of what needs to change within an organisation. They often have their own language or taxonomy and don’t always see each other’s perspective; a world of service vs. capability.

But business architecture provides the tools, techniques, accountability and ways of working to facilitate the efficient, fast flow and compliant change sought by financial institutions. It ensures that in an environment of ongoing transformation, operational resilience is maintained, by ensuring financial institutions have a complete understanding of their processes, their associated risks and controls, and how they are fulfilled through technology and people.

Customer outcome mentality

The business architect is the person in an organisation who can directly correlate customers’ needs and the service outcomes they require, aligned to strategy, with technical and operational solutions, validated through value streams. They put the customer at the heart of every part of the business, and this is a unique and much-needed aspect of today’s change programmes.

I like to think of a “shop window” when describing the relationship between any financial organisation and its customers. The shop window conveys a business’s brand, identity and purpose. It enables the customer to peer inside the organisation, and see the services on offer and products provided. From this, customers make instant decisions on whether it meets their needs.

Just like a traditional shop window, financial organisations are also able to see out. By doing so they can validate everything they do operationally and technically through the lens of the services provided to customers.

The window sheds a critical light onto operational and technical solutions, helping evaluate these by the value they provide to customers. If FS organisations don’t pay attention to that window, they will find themselves in the dark making assumptions about where to invest. This is dangerous territory when budgets and timelines are tight.

Therefore, business architecture helps financial organisations look through the shop window – both ways – empowering organisations on their digital transformation journey.

Business Architecture helps put FS companies in the shoes of their customers, and understand what their needs are, what services should be offered and where they should be accessed. Business architects inform and interpret strategies to ensure these needs, and the services provided to address them, are clearly and consistently articulated. It enables the early identification of capability gaps, that will fail to meet business strategy before problems arise.

Customer-centred design

During this shift towards a more customer-centric future, my advice to any financial organisation – big or small – is to ensure there is complete transparency through their own shop window. Without it, there runs the risk of making strategic decisions in the dark about new products and services powered by technology.

In a highly regulated and incumbent sector, the only way to successfully address customers’ needs is to actively engage business architecture from the outset.

This article was first featured in the Finance Derivative.