Modernizing banking: AI and cloud strategies for digital transformation

Proverbio addressed the notion that digital transformation is inherently challenging for banks. He acknowledged that while the process can be difficult, the real challenge lies in aligning the bank's objectives with the fast-changing market landscape. For example, replacing core banking systems often lacks a clear business case, making the investment hard to justify. Moreover, unexpected changes along the way require banks to stay flexible and adapt.

He compared the process to waiting for the planets to align, noting that Intesa Sanpaolo has seen the right conditions come together over time, allowing for significant progress.

Proverbio highlighted AI's critical role in transforming banking operations. At Intesa Sanpaolo, AI is used to enhance customer experiences and streamline processes across digital branches and contact centers. Here, customer information is automatically summarized, speeding up service delivery. In corporate banking, AI helps create client plans by synthesizing data, while in anti-money laundering efforts, it reduces the workload by filtering out false positives.

He emphasized that generative AI significantly boosts efficiency by summarizing knowledge and providing reasoning capabilities, reshaping operations in a positive way.

Proverbio stressed that modernizing legacy systems is essential, especially for traditional banks. As data becomes more crucial in the digital economy, clean and well-organized data is needed to leverage AI effectively. Outdated systems tied to physical branches can delay the launch of new products, making it imperative for banks to undertake deep transformations to remain competitive.

Intesa Sanpaolo began its cloud migration in 2020 to modernize its technology stack. The choice of cloud provider was influenced by the need for a nearby data center and a partner capable of fostering cultural alignment and innovation. The bank aims to have 60% of its systems on the cloud by 2025, boosting agility and efficiency.

Regarding FinTech collaborations, Proverbio explained that Intesa Sanpaolo focuses on projects that promise significant benefits. For instance, it has partnered with a FinTech firm for core banking solutions, with a well-defined roadmap and contingency plans in place.

Proverbio underscored the importance of agile methodologies in aligning business and technology. Though resource-intensive, agile practices facilitate early delivery of proof-of-concepts, helping businesses adjust plans and visualize outcomes. He also noted the crucial role of co-sponsorship in major transformation projects. At Intesa Sanpaolo, aligning diverse stakeholder objectives—ranging from the CEO’s digital agenda to the CFO’s cost-reduction focus—has enabled the bank to create a unified transformation plan.

Proverbio advocated for a phased approach to transformation, highlighting that continuous delivery helps build credibility and allows for adjustments in response to external changes. This approach reduces risks associated with large-scale projects while accommodating evolving customer needs.

The discussion also addressed the balance between in-house expertise and external consultants, especially in data-related projects. While external insights are valuable, Proverbio argued that data interpretation should remain a core competency within the bank. Integrating new technologies requires a collaborative approach, blending best practices from technology vendors with the bank's existing capabilities.

As the banking sector evolves, traditional institutions must embrace initiatives that modernize legacy systems and adopt cloud-native architectures. This involves leveraging AI for process optimization, selectively partnering with FinTech firms, and integrating agile practices into project management. By following these strategies, banks like Intesa Sanpaolo can manage the complexities of digital transformation and deliver highly personalized services to stay ahead in a competitive landscape.

The webinar Modernizing Legacy Systems and Launching Cloud-Native Architecture offered valuable insights into strategies for executing rapid, large-scale transformations. The panel emphasized that while the journey is challenging, a flexible approach and the right partnerships can help banks achieve the alignment needed for success in the digital age.