Banking Transformation: How to Keep Pace Without Killing Profits
Large-scale banking transformation has arrived. Banking has been primed for this shift for some time now, with the fintech revolution disrupting traditional models — though not at the same level as other markets, due to larger concerns of risk versus reward and the potential for plummeting public perception if client data is mishandled. But with customers now embracing the convenience and speed of digital banking solutions, companies must find a way to quickly bridge the convenience gap without compromising security or taking a hard loss. Here’s a look at how banks can embrace the transformation and keep pace without killing profits.
According to the MIT Technology Review, the finance industry is accelerating toward “exponential banking” — making use of adaptable and agile technologies to expand the area of contact with customers while simultaneously multiplying both the variety and quality of services offered by banks. Governments are also getting in on the act: As noted by Banking Technology, Switzerland is rolling out new rules for fintech firms, allowing them to innovate and experiment before obtaining specific authorization and permits to operate in the financial space.
So why the shift in companies and countries alike? Availability. According to the Federal Reserve, over half of smartphone owners now leverage mobile banking apps. And these apps have to work — clients have little patience for being told that servers are down or transactions “cannot be completed.” The solution: A recent Capgemini white paper suggests a significant shift to the cloud, even for core business activities, in order to both support the new app infrastructure and drive global growth.
Self-Service Solutions for Banking Transformation
How much should financial institutions off-load to self-service devices and solutions, and how much should they keep closer to home in brick-and-mortar branches? As noted by The Financial Brand, there’s still a solid case for offering in-person meetings and support with face-to-face interactions driving 5 percent higher client satisfaction. In addition, customers are 8 percent more likely to recommend their bank after an in-person visit. But here’s the thing: Customers don’t need — or want — to meet in person for every banking concern.
Banking clients prefer a mix of on-demand support and self-serve offerings. This starts with mobile banking apps but also includes services such as peer-to-peer money transfers, investment management tools and even the classic self-serve ATM. The problem? Multiple services mean multiple third parties and a host of maintenance challenges. How do response times and availability guarantees differ from vendor to vendor? Do they put the needs of the customer first? Addressing this issue means thinking big — tapping a managed service provider to help manage multiple self-services and ensure client-facing apps and devices are always up and running.
Leaving Legacy Behind
Beyond the need for highly available apps and self-supportive technology, banks must also confront what’s holding them back: legacy technology. According to Computer Weekly, for example, the once-dominant Royal Bank of Scotland (RBS) has been plagued with a host of IT issues — such as online payments abruptly halted and account access disrupted for days — thanks to poorly maintained legacy tech. It’s a familiar problem for financial institutions: How can they transition away from legacy solutions that remain essential for day-to-day operations? It starts with the right support. Legacy technology, such as aging ATMs, can still benefit from analytics-based maintenance solutions that help proactively solve problems before they impact service.
Meanwhile, making the transition is best accomplished with patience and precision. As legacy apps age out, banks must replace them with custom-built cloud solutions, and as hardware reaches end of life, it’s worth considering a move to off-site servers and support to increase redundancy without impacting performance. It’s a matter of degrees, not distance: The right technology implemented the right way can help bring banks up to speed. Going all in for a cloud solution without planning or prediction may simply drive up spending.
Banking transformation is underway across the globe. By opting for high availability, supporting self-service and leaving legacy tech behind as required, banks can stay on pace and in profit.