Financial Services and the Future
Many banks are at a fork in the road: Should they focus on innovating the back-end or the front-end of the banking experience?
Financial services and more specifically banking, has changed so much during the last decade. Many retailers and shoppers worldwide now prefer electronic payments over cash or credit. They embraced first-movers Apple Pay, PayPal, Amazon Pay, and Alipay to simply send and receive secure digital payments. Today, many younger consumers completely manage their money on their phones and watches creating a huge opportunity for global financial institutions to leapfrog competitors by delivering sophisticated, secure mobile apps and payment platforms to attract these new potential customer.
How quickly will banking transform to meet changing consumer needs?
Well, it depends because many multinational banks have effectively automated and modernized IT, enabling digital banking experiences and engagements. That’s the good news. Digital banking apps are quickly becoming the face of the bank and now represent a bank’s brand. Yet that’s led to fewer clients having strong banker/bank relationships. In addition, traditional monolithic apps are holding many banks and financial services organizations back from being even more digital forward — in fact, putting them just a click away from their competition.
Banks may need to choose now how they dedicate the next 10 years: to powering financial solutions or owning the customer experience. That’s a tough choice. However, with a strong digital foundation, financial organizations can do one, both, or even pivot further down the road.
To compete, banks will need to quickly accelerate the digital transformation they’re already undergoing, including grasping emerging technologies such as artificial intelligence and machine learning (AI/ML) 5G, blockchain and cryptocurrency. They must collaborate and co-engineer with new partners in interoperable environments. Banks will also need to better protect and make use of the massive data their customers generate.
And all of this necessitates attracting and hiring talent that can drive digital transformation as well. Traditionally, financial services jobs have required years of industry experience. Not anymore. Yet how banks entice and keep talent away from high tech and other industries is by modernizing their technologies and processes.
Rebooting Banking App Strategies
Banks rebooting their strategies need to move quickly with new business models. They’re competing with longstanding brands in banking, as well as nimble FinTech startups outside the traditional banking sector. Banks also need to meet high expectations. Consumers, businesses and employees expect any technology they use to be extremely convenient, highly personalized, consumer-simple to use, and of course, secure on any device.
To better enhance customer experiences and drive growth, financial services organizations need to deliver better applications. Modern apps are built differently than traditional apps. These apps are built to be continuously improved and rapidly made available via the cloud. The good news is, though, that existing apps can be modernized too, so organizations can build, run and operate their entire app portfolio in the cloud. However, there are a number of challenges for banks making this move. The right platform and partners can vastly accelerate the transition
The Future-Ready Bank
At the start of the decade, banks were compelled to speed up the production and launch of new and improved digital banking products and services. Even before COVID-19, the banking landscape had changed dramatically: new demographics, regulations and competition. Physical restrictions from COVID-19 drove retail banking customers (half of U.S. customers pre-pandemic) to mobile apps. Within a month, digital banking usage increased 14% among the largest banks.
Financial services leaders also needed to urgently enable employees to work productively, securely and compliantly from their homes. Those with a proven digital foundation already in place quickly and seamlessly transitioned to a new way of working and doing business while those without robust digital infrastructure began to cobble together solutions.
Every financial services and banking institution must be future ready. The next 10 years of banking shouldn’t be determined by the limitations of existing technologies or the fear of security threats. Banks’ 2030 visions should be dedicated to empowering people, businesses and communities to financially succeed from everywhere, even during a crisis. However, banks grapple with how to budget for innovation to meet new consumer demands while maintaining and updating legacy/aging platforms to be more resilient and secure. That forces business executives to make tough calls - do they maintain and update their core platforms investing their dollars to do things customers will never see, or do they invest in innovation to address new workflows?