Lessons learned from ATB’s core banking system revitalization

ATB Financial

Calgary-based ATB Financial recently underwent a major transformation – replacing its core banking system. Payments Canada had the opportunity to speak with John Tarnowski, Senior Vice President - Head of Customer Experience, to talk about the organization’s experience, his words of advice for all those embarking on a similar venture, and why the industry must align on core payments system Modernization.
Q: ATB replaced its back office system a few years ago. Since then, you have been demonstrating leadership on the technology front, as an early supporter of Apple Pay and with some experimental work on blockchain. How much of this depended on the renewal of your systems?
A: Historically, ATB has had an innovative flare to it. The size helps, of course, but it’s also part of the culture – we hire people with vision, who have an innovative way of thinking, and we foster that. So, the replacement of our system was considered a fairly bold and aggressive move at the time. But, our legacy systems were restrictive and we needed a banking platform that could move payments faster for customers across the business and across channels. It was felt that what we had was limiting the customer experience and we couldn’t continue to try to customize this monolithic, unscalable architecture.  
As much as it was a forward looking view at the time, I don’t think there was as detailed an understanding of just how much the digital influence would evolve. While digital is obviously an enabling piece of our offering, we still need to build it out and up and we are now two years into our journey to fully digitize the bank. We’ve been able to do that by leveraging the scalability of our new core banking system, but is also about looking at things from a far more user-centric standpoint. That’s what has led to the Apple Pay and blockchain developments you mentioned.
Q: There were a few bumps in the road when ATB first began its back office transformation. Any lessons learned you would be willing to share with others embarking on this venture?
A: The industry is at another fork in the road. You’ve got legacy systems at banks and you’ve got this acceleration of FinTech innovation and interaction and banks need to figure out how to remain relevant. Just plugging in a new system is not the way to do it. With the pace of change and customer expectations because of technology, making just one bet isn’t going to be good enough. It’s a multi-year journey and when it’s done, the market will have moved again. For example, everyone is focused on virtual reality, but there are no guarantees about what it will look like in five years. So, how much of a bet do you place on it now?

You must make informed, strategic decisions based on what you are trying to accomplish but not be so tied to it that you can’t pivot. If you take a traditional banking approach to solving this, you’ll end up spending a lot of money and have a ton of infrastructure and it won’t be as flexible as it needs to be.

Q: Interesting. Given your experience, what are your thoughts on Payments Canada’s plans for core payments system modernization?
A: There are going to be a lot of opinions in the room. Each organization is structured differently and there won’t be a one-size-fits-all solution. But, we need to find a middle ground – work together for the greater good. Financial institutions must continue to modernize and innovate as the most agile companies in the world – Facebook and Google for example -  continue to push into new areas and seek to continually enhance their client experience.
The most important thing is that we continue to care about the customer experience and build solutions that matter to them. We have to remain diligent to what we are trying to solve and focused on the reality of what needs to be done versus the possibility of what could be done.
Q: How do you think ATB will harness the benefits of a modernized core payments system?  
A: Payments Canada is making payments relevant to customers when they want them. At ATB we’re keen to leverage the modernized core payments system to move money faster within Canada, allow customers quicker access to funds and expand the payment capabilities we can offer our customers to better manage their day-to-day lives. It will empower both large corporates and small business. We are all about the velocity of money and the Modernization agenda is key to that. The question becomes, how do we do this in a manageable way financially? We do it collectively – as an industry - with an eye to cost and creating a sustainable model.