Digital Disruption (Part 1)

 1. Technical Innovation
For centuries banks disruptionhave been a strong force in driving technical innovation, from the development of the first credit card in 1966 followed by the ATM in 1967, through to the introduction of telephone banking in 1980 and faster payments in 2008.

Fast forward to 2016 and existing business model are being challenged by agile new disruptors that have been built for the digital age, putting the customer in charge, with social, mobile, data analytics and cloud technologies at their core.

These new digital disruptors can quickly build scale and often face fewer regulatory challenges than more established players.

2. Cost of Inaction
In this new digital world, the cost of inaction almost exceeds the cost of action.

The retail sector presents a cautious tale, for example Borders book stores (sales $3.3bn 2001) and Kodak (sales $15bn 1999) paid the ultimate price for failing to anticipate how digital could destroy well established business models.

Blockbuster famously passed on the opportunity in 2000 to purchase Netflix for $50m as it was felt that the on demand / streaming service was too niche, only to see Blockbuster’s eventual bankruptcy in 2010.

Having killed off the DVD market, digital continues to challenge the revenue streams of established cable and satellite providers as customers continue to “cut the cord” and stream TV content over the Internet.

Late action can be just as costly.  WM Morrison, the fourth largest grocery chain in the UK, did not introduce online shopping until 2014, forcing it into a costly shotgun wedding with one of its competitors, Ocado, for which it pays an annual fee of £45m per year.

3. New Wave of Disruption
While digital disruption to date has typically focused on the retail sector, new levels of digital disruption are being focused on the financial services sector. From new Robo advisors for Asset Management through to Online peer to peer lenders and payment platforms, the level of digital change continues to accelerate.

Increased competition from emerging peer to peer lenders, which were first established in 2004 to connect investors to borrowers online, continues to grow at a rapid pace. Organisation such as Funding Club and Zopa continue to challenge legacy business models, offering improved returns for borrowers and investors alike.

Peer to peer “marketplace Lending is in Liftoff, with a 123% Compound Annual Growth Rate from 2010-2014” Morgan Stanley June 2015

New digital disruptors are not weighed down by legacy infrastructure and higher regulation facing the more established players. Operating costs are significantly lower at  2% compared to 7% for traditional banks, enabling digital organisations to rapidly transform, grow and expand new business opportunities.

At the Gartner Symposium in Barcelona this year is was reported that digital organisations allocate a far higher proportion of their investment budget to Transform and Grow new business opportunities (25% / 25% respectively) when compared to a typical enterprise (13% /  20%) as shown in the following schematic:

4. In Conclusion
While digital disruption has been successful in breaking down the barriers to entry for new players such as peer to peer lenders and payment platforms, the question remains will established banking business models face a similar prediction as when Uber disrupted the 400 year old taxi market?

In my next post I will be discussing the key trends of Digitisation and Digitalisation.

Email :
Tel : +44 (0) 7702 777770

Posted in Digital | Leave a comment

CIO Dialogue

November 2015

CIO Dialogue

Ian is excited to be confirmed as a keynote speaker at the leading CIO Dialogue conference on 2-3 November 2015.

Ian will be presenting a thought provoking session on “Cost optimisation in 2016: Creating long term sustainable value for your organization”.

Posted in Transformation | Comments Off on CIO Dialogue

Ian Alderton finds a warrior instinct in banking at Bank of Tokyo-Mitsubishi

Check out my interview with Mark Chillingworth (Editor in Chief)  in the leading CIO industry magazine (





Posted in Press | Comments Off on Ian Alderton finds a warrior instinct in banking at Bank of Tokyo-Mitsubishi

Reducing Enterprise Costs (Part 3)

In my previous 2 blogs on the Key Priorities For The CIO of Tomorrow I discussed Increasing Enterprise Growth and Delivering Operational Results.

In this blog I will be discussing Reducing Enterprise Costs.

In the aftermath of the credit crisis, businesses have suffered a series of major shocks from the Euro zone crisis, such as a challenging credit environment and a lack of market liquidity, significantly impacting business confidence.

Combined with continuing uncertainty, the ability to reduce enterprise costs is now firmly entrenched as the number one priority to re-position and invigorate today’s organisations for success in a new economic landscape.

In the current environment, I.T. is a critical catalyst for reducing enterprise costs. With this comes new challenges and tensions. The technology platform has to be flexible and agile, supporting reduced business costs while at the same time enabling the enterprise to emerge stronger, fitter and leaner for the challenges ahead.

Market trends indicate that the number of companies now cutting costs has climbed to over 50% of organisations, where the magnitude of cuts is often in excess of 20%.

With this comes the critical constraint of how to meet the demand for improved business performance, flexibility and agility while at the same time reducing costs?

In my experience this can only be achieved by seeking out significant and sustainable cost reductions through a process of:

1. Cost Compression
2. Optimisation
3. Re-architect and Re-platform

1. Cost Compression, aka Minimisation
The first step of the process focuses on the quick wins for dramatic cost compression. From renegotiating vendor contracts through to optimised processes to reduce enterprise technology expenses.

This is often achieved by focusing on reducing sales and servicing costs by introducing customer segmentation based on profitability and value, through to industrialising high touch processes through the introduction of self-service digital channels.

New levels of industrialisation can be achieved through the use of new technology, from standardising enterprise applications, such as CRM, through to redesigning IT processes to make use of commodity based SAAS and cloud based technology.

In one of the biggest examples of standardisation and virtualisation to date, BBVA, the Spanish bank, migrated all of its 110,000 employees across 26 counties onto Google Apps to drive increased efficiency and innovation for its global workforce.

These opportunities need to be prioritised according to their potential returns and risks and will typically enable organisation to realise savings in the range of 10% – 20%.

2 Optimise
The second step is to Optimise – to make current process better, faster and cheaper. By making effective use of technology assets, through rationalisation, simplification and automation, organisations can be migrated to a lower cost base to dramatically improve their operating margins and overall profitability.

By reducing operating complexity, such as consolidating and rationalising servers through to standardising and industrialising operating systems, organisations are better able to respond to new challenges and growth opportunities.

New tools such as virtualisation enable organisation to drive greater levels of optimisation through a process of standardisation. By eliminating processes that add little value and outsourcing non-core services, organisation can reduce overall fragmentation, complexity and waste throughout the enterprise.

At the recent FS Tech 2013 awards, the Solstice Programme from Lloyds Bank was recognised as one of the largest network optimisation programmes to date, driving greater levels of efficiency and optimisation, through a process of standardisation, consolidation and industrialisation of enterprise infrastructure.

During the optimise stage, organisations can often achieve cost reductions in the range of 15- 30%, enabling the organisation to be successfully position itself for the third and final phase.

3. Re -Architect and Re-Platform
The third and final stage is to Re-architect and Re-platform the technology proposition. Only by addressing the legacy of aging technology can organisations truly drive strategic and structural cost reduction.

Ageing technology consumes a disproportionate amount of energy, effort and cost thereby depriving the organisation of the very ingredients it needs to flourish. Legacy technology should be reengineered for the future. Mainframe platforms should be retired and ageing core banking platforms should be replaced. In addition, enterprise wide processes such as CRM and document generation need to be restructured to drive new levels of integration, automation and efficiency.

Only by rewriting legacy platforms and restructuring enterprise wide technology can organisations be in a position to drive sustained strategic and structural cost reduction.

This new wave of IT enabled cost reduction will create organisations that are lean and adaptable. These organisations will be built on a platform of sustained strategic and structural costs reduction, driving new levels of competitiveness and benefits to the wider enterprise.

In today’s new world it will be the leaner, low cost, organisations that will survive.

Email :
Tel : +44 (0) 7702 777770

Posted in CIO | Comments Off on Reducing Enterprise Costs (Part 3)

Biting The Bullet – Delivering Operational Results (Part 2)

In my first post in the series of Key Priorities For The CIO Of Tomorrow, I discussed Increasing Operational Growth.

In this post I will discuss how organisations need to bite the bullet and transform their complex and highly inter connected enterprise architecture to deliver increased operational results.

2. Delivering Operational Results
In today’s world, enterprise technology is typically over complex and inter twined with intricate processes. In a challenging landscape where wholesale replacement is not feasible, changes are bolted on decreasing channel efficiency, driving up operational costs and introducing increased risk of IT failures.

Overall, the complex and inter twined enterprise architecture restricts an organisations ability to breathe and successfully serve its customers, shareholders and the wider economy.

Cross Enterprise Process Efficiencies
A recent Gartner survey identified that :

“Enterprises realise on average only 43% of technology’s business potential”

Furthermore, typical business as usual activity consumes up to 70% IT budget just to maintain the status quo.

Today’s organisations need to exploit new and powerful synergies across the complex enterprise architecture through a process of specialisation.

Transformed Infrastructure
One of the early pioneers in this field were energy companies with vast high voltage infrastructure assets, connecting the length and breadth of the nation.Through a process of specialisation, new synergies were exploited by transforming their infrastructure assets to deliver a new nationwide data network, at minimal incremental cost, by transmitting data over the existing power network.

Similarly large telcos are continuing to transform their infrastructure. In a world where traditional voice calls are declining, telcos are moving from the analogue and cash world to the new digital economy through a process of specialisation. One of the biggest assets owned by the telcos is their billing relationship with the customer. This represents a significant commercial opportunity for telcos to establish new and exciting propositions, such as mobile payments and mobile wallets, potentially disrupting established payment providers.

Japanese telecommunications organization NTT DOCOMO successfully exploited its billing pedigree and created a critical mass of 35m users for its mobile wallet by leveraging existing customer billing relationships.

NTT DOCMO’s mobile wallet, or Osaifu-Keitai as it is known locally, provides identity card, loyalty card, public transport ticketing as well as electronic money by transforming its commercial assets to deliver highly competitive and compelling operational results.

New Operational Opportunities
Only by transforming existing enterprise assets can organisations exploit new synergies and drive new levels of operational results through a process of specialisation. Where power companies and telcos have led, other organisations now need to follow.

In the next blog, I will discuss the third part in the series –Reducing Enterprise Costs.

Email :
Tel : +44 (0) 7702 777770

Posted in CIO | Comments Off on Biting The Bullet – Delivering Operational Results (Part 2)

Key Priorities For The CIO Of Tomorrow (Part 1)

Consumers are driving the digital economy and mobile revolution, requiring a new level of customer experience and service.

At the same time, the current low interest rate and low margin environment is stagnating growth requiring organisations to aggressively look at new ways to increase their top line revenue growth and bottom line earnings.

In a recent report from Gartner, the top business priorities for 2013 were identified as :

1. Increasing Enterprise Growth
2. Delivering Operational Results
3. Reducing Enterprise Costs

In this first of a series of key skills for today’s CIOs, we discuss Increasing Enterprise Growth.

1. Increasing Enterprise Growth – Next Generation Remote Banking Solutions

In an environment where revenue growth continues to be sluggish, clients are demanding innovative products and greater service. Customers have now come to expect a digital approach to conducting business that is online, mobile, social and real time.

Banks have to respond by focusing on Next Generation Remote Banking Solutions to drive new forms of customer engagement and experience, such as personal finance management and self service capabilities. These new innovative services will deliver increased customer confidence and loyalty while at the same time accelerating the reach and market penetration of new digital banking services.

Furthermore, the next generation of Remote Banking Solutions will offer increased operational efficiencies and effectiveness. From new forms of client engagement, such as new self service channels, through to streamlining the user’s cross channel digital experience, reducing operational costs and driving bottom line earnings.

Only by developing the next generation of Remote Banking Solutions, to drive customer engagement, customer experience and financial efficiency, can banks truly deliver new forms of enterprise growth.

In the next blog, I will discuss #2 – Delivering Operational Results.

Email :
Tel : +44 (0) 7702 777770

Posted in CIO | Comments Off on Key Priorities For The CIO Of Tomorrow (Part 1)

The Rise of The Digirati – A new form of Digital Maturity

In a world where the pace of change is accelerating, a recent report from Cap Gemini ( ), identified the creation of a new class of digital organisation, the “Digirati” that are leading the new digital economy.

Digirati organisations were identified as significantly outperforming their industry peers:

• The new Digirati were 26% more profitable than their industry counterparts.

• They generate 9% more revenue through their employees and corporate assets

• In addition, Digirati create 12% higher market valuations than their peers.

Digital Maturity
What is unique about the Digirati organisations, is that they have developed a new form of competitive advantage in the form of digital maturity or DNA. The report goes on to identify that this new digital DNA has been created as a combination of two separate capabilities – Digital Intensity and Transformation Management Intensity, as shown in the following schematic.

Digital Intensity is the investment in technology enabled initiatives to change how the company operates from customer engagement initiatives, such as location based marketing and social media through to internal operations, such as optimised pricing and real time monitoring.

The second dimension is Transformation Management Intensity, creating the leadership competencies, culture and capabilities to drive large scale digital transformation across the whole organisation. This consists of shaping the vision of the future organisation and joining up disparate and disconnected digital silos, such as a marketing, customer on boarding etc into a unified digital organisation

These organisations have successfully evolved their digital DNA, through a combination of Digital Intensity and Transformation Management Intensity, successfully changing customer engagement models and business operations to drive increased completive advantage.

Companies recognised as having a high level of Digital Maturity, such as Zappos, American Express and ZestCash, have built their success on a number of customer facing processes, such as Social Media, Customer Experience and Operational Processes to define their digital vision and transformation journey.

For large organisation, this can represent many millions of pounds to both top line earnings and bottom line revenue growth.

In a world where there are no digital signposts to follow, the majority of successful stories focus on fast moving start-ups such as Instagram and Piterest.

More established organisations are now starting to respond. Out of the digital haze a new form of organisation is emerging – the Digirati, an organisation that can holistically build new forms of digital DNA, transforming customer engagement models and operational processes, to consistently outperform its industry peers to deliver new forms of digital productivity, profitability and proficiency.

Email :
Tel : +44 (0) 7702 777770

Posted in Innovation, Digital | Comments Off on The Rise of The Digirati – A new form of Digital Maturity

Is Risk Depleting Your Capital ?

 In today’s highly regulated environment, many organisations are being adversely impacted with the increasing regulatory burden depleting their economic capital. For every pound spent on regulation, there is a direct reduction in the amount of capital available for the front office to generate an economic return.

Historically risk, compliance and regulation have always been key drivers in terms of defining budgets. This has resulted in organizations making significant investments in governance only to have a ROI based on ticking the regulatory box. This is no longer sustainable.

In today’s post credit crisis environment, of higher capital costs and lower leverage, it’s time to implement an integrated risk management framework for a new era of strategic business needs and competitive advantage. To succeed in this new environment, risk management has emerged from the back and middle office as a new form of competitive advantage, tying the outcomes of risk management directly to strategic business outcomes such as driving product innovation, increased operational efficiency and intelligent risk reporting to name but a few.

Successful organisations need to look beyond regulation and view risk management as a strategic element of their value chain in order to deliver sustainable growth and innovation. This can only be achieved by taking a holistic view across multiple and sometimes disparate business silos, to maximise the use of capital and leveraging data as an asset to drive greater economic returns.

Financial institutions need to be able to look at different markets, customers and product lines in a more sophisticated manner. Regulators have woken up to the fact that technology can be deployed to collect the right information to improve financial accountability, surveillance and integrity. Coupled with an increasing regime of legislative control, a new level of regulatory burden is shaping how organisations respond to a new complex landscape.

Underpinning this is the need for information based on more than just a finance or process perspective but deep risk management. Organisations require new risk management capabilities to support real time scenario planning and risk mitigation. This can be achieved through agile, effective and efficient technology architecture.

Shared Solution Architecture
Many organisations have grown through aggressive growth and acquisition with the consequence being that their technology real estate has become bloated, costly and highly fragmented. This technology footprint will often consist of many 100s of systems, many of them overlapping and duplicated, such as multiple loan, securities and risk management platforms.

What is required is a shared solution, across all business silos, that leverages the latest technology, where amendments can be made to make compliance desirable not feared. This can be achieved through the harmonization of technology and consolidating vendor applications in areas such as data warehousing, trade entry, risk calculation engines and business intelligence reporting environments. This will make significant positive contributions to risk management with more flexible risk reporting, faster risk engines, extended asset coverage and more timely market data.

Competitive Advantage
The increasing pressures on margins coupled with the high cost of technology and burgeoning regulation means that firms are searching for competitive differentiation by moving from compliance to performance and adopting more effective and efficient risk management practices.

Technology is playing a key role as an enabler for this transformation, driving demand for new architectures and high-performance computing. To win in the marketplace, organisations must out-innovate and out-execute, and that means moving faster, being more accessible to clients, launching new products and pricing more effectively. Technology rather than people will be at the forefront to drive risk management as a new form of competitive advantage.

Email :
Tel : +44 (0) 7702 777770

Posted in Risk / Regulation | Comments Off on Is Risk Depleting Your Capital ?

CIO Magazine

Stop Press : Check out my latest article on Big Data as the new digital currency that has been published in the prestigous CIO magazine …


Big Data Gives Banking CIOs New Frontier For Innovation

Big Data has been with us for many, many years. Arguably, Big Data can trace its roots back to the 1880 US census.
This survey of 50 million people generated 2.5 gigabytes of data with results being calculated using punch cards in just six weeks.

The technology boom since 1880 has created the explosive growth of data within organisations.

IBM states that data growth is running at a torrent of 2.5 exabytes per day (where an exabyte is a billion gigabytes).

Of this 90 per cent of the information has only been created in the last two years.

Since 1880, technology has created a global economy where transactions have evolved from cash to credit cards through to electronic payments. The next evolution is a digital economy where data is the new currency.

Continue to full article …

Posted in Big Data, Press | Comments Off on CIO Magazine

The Emerging Technologies Hype Cycle

With all new technology, the challenge is when to adopt and make the right investment decision. Do you jump before main stream adoption to gain competitive advantage over your peers or do you wait until there is broad market acceptance of the commercial value and benefits?

A recent report from Gartner, a leading technology research company, identified the fastest moving technologies in its 2012 Hype Cycle for Emerging Technologies.

Many of these technologies (see below), such as Big Data, Cloud and Social Analytics (social CRM) have been discussed in previous posts. One thing was common in that all of the technologies followed a predictive pattern on how the technology is adopted to maximise both impact and value.

Source: Gartner’s 2012 Hype Cycle for Emerging Technologies

Looking to the emerging technology cycle, we are at a new tipping point where a number of new technologies are converging, such as Big Data, Cloud and Social CRM. These new technologies are becoming emedded and are disrupting more established banking business models in their wake. In much the same way as when the ATMs were first introduced in the 1960s, people continued to prefer interacting with a bank clerk until dramatically in the 21st century, with the culture change of telephony, online and mobile banking, most people don’t set foot inside their local branch.

This can be illustrated by looking at one of the emerging technologies on the hype cycle.

Speech Recognition
Speech recognition has the opportunity to converge with a number of other emerging technologies, such as Cloud and Big Data, to disrupt conventional banking channels.

As we saw with the ATM, it may only be a period of time before people find it more efficient to talk to a robot rather than a bank clerk.

Surprisingly research in speech recognition predates the invention of the modern computer by more than 50 years. Alexander Graham Bell was inspired by his wife, who was deaf, to experiment with transmitting speech which ultimately led to his invention of the telephone. Not until the 1990s that computers were powerful enough to handle speech recognition.

The very essence of speech recognition can be distilled down to mathematics – you don’t need to recognise accents or dialects. James Baker, a computer speech revolutionary and founder of Dragon Systems, a leading voice technology company, identified that speech recognition had to calculate the mathematical probability of one sound following another. His algorithms have become the industry standard.

Converging New Technologies
Speech recognition technology is already commonplace in call centres, where it lets users navigate through menus and decides when calls should be handed off to a real customer service rep.

We are now entering a second technology cycle, with speech recognition being propelled forward as it converges with a number of emerging technologies such as consumerisation and Big Data to provide new commercial benefits.

All speech recognition is highly dependent on data – the more data you have, the better results you get. Google have driven this to a new level by embracing Cloud, Big Data and Data Exhaust to store every spoken or written search phrase entered into its systems. Using Big Data statistic searches, Google’s speech recognition can determine words based on its digital content.

Additional capability is delivered by Smart phones, which now have as much processing power as the mainframe machines of the ’90s. Coupled with high-bandwidth data connections to the cloud, remote servers can perform the heavy lifting required for both voice recognition and understanding spoken queries.

Using machine learning and statistical data-mining techniques, smart phones can now understand human speech. People now talk to their smart phones, asking to send email, search for directions or find information on the web – want to know more, ask Siri.

Speech is an exciting interface and can dramatically simplify interactions more than anything else. When using mobile applications, speech is the natural interface – typing will always prove to be frustrating and erroneous.

In a world where people are increasingly interacting with technology, the voice of the customer will be stored in the cloud. This data can then be accessed and analysed to provide new innovative services such as fraud detection and security biometrics to name but a few.

As an example, Sberbank the largest retail bank in Russia has utilised speech recognition in its ATMS for lie detection. By testing the customers responses to questions from a database of interrogation recording, Sberbank are able to ascertain when people are lying, dramatically improving their fraud detection rates.

For financial organisations, speech recognition is on a new and exciting trajectory. With a well established presence in call centers driving operational efficiency, the new technology wave for speech will see it become embedded with new emerging technologies such as Big Data and Cloud to create new operating models to drive greater product differentiation and customer value.

Today we can talk to computers, but very soon they will talk back.

Email :
Tel : +44 (0) 7702 777770

Posted in Innovation | Comments Off on The Emerging Technologies Hype Cycle