‘Evolve or become irrelevant’ has been the mantra in the banking and finance sector for some time now. Updating legacy systems and transitioning to more agile, innovative technology has been a challenge at the forefront of most banks’ priorities within recent years.
Developing digital experiences for clients and keeping up with increasing customer expectations is essential. Banks must transition to integrated cloud systems and utilise new innovative technologies such as artificial intelligence, however, updating the technology itself isn’t enough, they must also recognise that moving away from traditional systems is both a technical and human process.
The importance of new technologies
The digital-native structure of FinTechs have strengthened their presence within the financial market, creating an increasing sense of urgency for banks to transition to more modern processes in order to compete.
A 2019 Accenture report found UK digital-only banks were set to triple their customer base from 13 million to 35 million, in just 12 months. Additionally, a 2019 survey carried out by Finder supported these findings, highlighting that 12% of British people have switched to digital-only banks, with a further two thirds planning on making the same transition in the future. This suggests traditional banks need to act fast in order to update their legacy systems before the market really explodes.
Banks must digitalise or replace legacy systems and automate processes in order to offer a customer first, secure and personalised banking experience. By embracing new innovative technologies like Artificial Intelligence, open API’s and cloud-based systems, traditional banks will be able to stay ahead of challengers and keep up with developments in the banking and finance industry.
A time to transition
There’s an opportunity for banks to utilise the same flexible, agile, seamless and highly personalised services model FinTechs continue to offer, reinventing themselves and introducing new ways to appeal to the customer. To create these new business models, and stay ahead of the time, it’s important to understand that it’s not just the technology that needs updating but also the organisation itself.
A popular strategy these days is opening satellite banks for both retail and SME offerings. Operating in relative isolation - separated from the incumbent infrastructure. This helps launch personalised banking in a fast and agile way. However, innovative core banking has just began to emerge, meaning supporting existing technology with extensive fintech-like banking requirements is a stretch.
What about updating management styles?
Developing a financial institution does not only propose the challenge of updating legacy systems and implementing new technologies, but going hand in hand is a more integrated approach to data and applications, new ways of working and managing workflows, and new responsibilities and projects.
Harnessing the benefits of digital and cloud transformation requires organisations to adapt and evolve their delivery models as well as breaking traditional banking siloes and leadership styles. From Junior to senior staff, it is important that all personnel are equipped with the understanding of new technologies implemented within the business, what it’s meant to achieve and the reasoning behind implementation.
We have created "Strategic guide to selecting a digital banking platform" to help you plan your switch to digital banking.