Ambitious financial institutions across the world aim are always looking for ways to differentiate themselves, attract customers, and deliver more significant revenue. Benchmarks in the industry are growing, with fintechs having set the pace for digital service. Some challengers enable account activation in as few as 40 clicks.
Time-to-market is increasing pressure on financial institutions grappling to retain customer loyalty. Releasing new features every two or three days, instead of once a quarter, is the norm for many technology companies. Banks should look to emulate these to ensure they’re on the cutting edge of the industry.
“You want to create new products from start to finish in 15 to 20 minutes,” says Vishal Dalal, CEO (North America, EMEA, and APAC). “It’s a huge aspiration, but not an unreasonable one.”
New connections
The possibilities of modern technology also enable new connections between an organisation and its customer. Banks could use real-time data from payments to tailor offers alongside user behaviour. Create reward systems through which customers can gain points by shopping at their favourite stores, or using partner businesses.
An ability to reach your customer in real-time applies to mitigating fraud, too. Organisations shouldn’t be restricted to a limited set of reporting channels, during which time a customer’s life – and their relationship with banks – can be negatively impacted.
This doesn’t mean building an all-encompassing end-to-end solution. True modern platforms enable users to capture and incorporate the best of breed in peripheral verticals. No technology infrastructure can master all aspects of the financial world, so it should be ready to seamlessly integrate with the leaders in other functional areas, like KYC or 3DS.
“All of this sounds like an ideal world,” says Vishal. “But it’s no longer an impossible task. All of these are possibilities enabled by a next-generation core. It’s worth considering that these expectations would have been considered unreasonable just three or four years ago. Now they are well within the bounds of reality and are, in fact, capabilities Pismo can provide.”
Holding on to legacy harms innovation
For those organisations retaining a legacy platform, it’s worth asking: how many of the possibilities above does my infrastructure allow? The answer is likely to be few or none.
“Creating differentiated products at speed is difficult with legacy systems,” adds Vishal. “There are few parameters available for product creation. Equally, the process is elongated: left to a product manager who does the basics, abstracts it, and then hands it to technology teams.
“This has a real-life impact. If you look at the top 200 banks in the world, there’s a good chance of a huge overlap in 80% of their product set. You don’t see too much differentiation, and that’s because product creation has become a prisoner to what the technology lets you do.”
Legacy systems operate in a world where timescales hamper reporting. Many organisations cannot process action programmes like reward schemes as generating reports takes too much time. A chain of actions is required to generate the report, action it, and then send out the rewards offer. This chain is broken by an event-driven architecture, but in legacy systems, it continues to create a drag on customer interaction.
Scaling infrastructure
When scaling infrastructure alongside demand, there are a few ways of doing so in real time that don’t involve the public cloud. “There are some contortions you could do,” says Vishal. “You could try reinventing the wheel and use the private cloud but capturing three or four times the volume, or five or six times the throughput, can only meaningfully happen on the public cloud.”
Financial institutions aiming to lead the pack as we enter a new modern age of banking should look inwards at the systems driving their products and services. Which aspects of the modern bank can your core reliably supply? Which aspects will it never be able to achieve? The trade-off is impactful, and the results of change are substantial.
Vishal Dalal spoke on a Pismo webinar, “Digital transformation without the core means nothing”. You can watch the full presentation below:
