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The banking industry is on the cusp of change driven by technological advances that have created the potential for new products, services and delivery channels that promise to reshape the definition of what banking means.
But for established financial institutions, this seismic shake-up is destabilizing long-standing business models and giving rise to competition from a new crop of providers, unencumbered by legacy tech systems, that offer financial services. Aimed at the digital future of services.
To continue to compete and remain relevant in the new era of industry, banks must adapt products and service models that meet changing customer expectations, while strategically re-evaluating their business strategy to determine whether which role they are best suited to play. Tomorrow’s financial services ecosystem.
in a recent interview with Michael Haney, Technisys principal of PYMNTS, Digital Core Amidst the technological transformation of the industry highlights three biggest priorities that should be on top of the banks:
1. Adopt an omnichannel and embedded service model
While previous waves of banking innovation saw the rise of customer self-service and digital channels, the current phase is in many ways a more fundamental re-imagining of what kinds of services banks can offer and how customers can access them. Haney said. those services increasingly exist across multiple channels and built-in He said that in non-financial platforms including social media, messaging apps and the Internet of Things.
“Now I can rely on my smart watch or trust through my smart speaker,” Honey said. “But more importantly, I can bank in those channels [banks] Do not directly own even non-financial brands, bring banking to the point of need and do not limit it to [a bank’s] Own branded channel.
For banks, the embedded paradigm requires a new, modular approach to development – and flexible – to build products suited for this ubiquitous channel. Core Banking Tech Stack to support that process.
,buy now pay laterstarting salary access, roundup savings, All of these things require a bank to take building blocks from the payments world, the lending world and the deposit world and reassemble them in completely different ways. You can’t do that with Common Business Oriented Language (COBOL) and mainframe systems,” Haney said.
2. Decide what kind of bank you want to be
The shift toward omnichannel and embedded financial services will force banks to make an important decision, Haney said: whether to continue “owning” their customer relationships across a growing multitude of channels and make the necessary investments to do so, or whether To take a more background role by providing banking services that underpin the offerings of other brands.
“There’s going to be a bunch of banks that want to keep all those channels front and center and have their brand front and center,” Haney said. “Other banks … are going to be more interested in banking as a service or embedded finance [model],
by use of Application Programming Interface (API)The latter group of banks will essentially act as a utility, providing back-end services and licensing that consumer-facing platforms rely on to provide financial services functionality within the context of their platform and consumer journey. Are.
“So of course there will be banks that will do both. But you really have to say, ‘What kind of bank do I want to be in the future?'” Haney advised.
3. Embrace Change and Collaboration
Whatever role a financial institution decides to play in the emerging banking ecosystem, success will require an openness to new ideas and experimentation. As they are features most banks have traditionally not been known to embody, a shift in mindset will be key to growth and continued relevance, Haney advised.
“It’s not even about having the right model or whether things will succeed or fail. It’s about a willingness to accept change and being willing to experiment as the parameters around you change,” Haney he said.
He cited the tech sector’s prevailing support for experimentation as a good model for banks to follow.
Cooperation will also be important, Honey said – both are trustworthy partner provider As well as the customers themselves.
“Don’t be afraid to work with consultants and systems integrators and software vendors,” Haney said. “Put the customer at the center. Embrace… co-creating and co-innovating with customers; getting them involved in beta testing, pilot testing; all of that.”
Watch: How financial institutions can grow their digital presence in 2023,
learn how Banks Can Compete With Fintech,
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