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Many financial institutions still rely on legacy systems or older computer hardware and software that were introduced more than half a century ago. These technologies were not designed with future-proofing in mind and were not intended to be upgraded or replaced.
Fast forward to 2023, and the financial services industry has changed beyond recognition. Digital start-ups are disrupting the market, and customers expect digital integration and seamless transactions. Banking services are no longer the sole preserve of established financial institutions.
Established financial institutions can feel more like supertankers than nimble speedboats as digital disruption races into the distance with their innovative products exceeding customer demands. But the process of updating or replacing older technology is not entirely bleak. With their size, resources and speed, these institutions can weather the storm, while agile disruptors are at risk. Established institutions that have the financial stability, customer base and solid reputation that digital disruptors lack, and some may question why they need to innovate at all.
Customer expectations are changing.
A PwC survey from June 2020 found that 41% of customers would switch providers because of a lack of digital capability. Today, customers expect the latest technology in all of their financial relationships, and companies that don’t meet these high standards are quickly left behind. As Gen-Z ages, they expect intelligent technology as a simple fact of life. Employees working within these organizations will also have higher expectations and will be reluctant to work with older equipment.
The changing scene can be surprising, especially for banks established with legacy technology. Research from BCG has shown that 70% of digital transformations fail over the past few years. Complex and costly legacy core banking transformation projects are negatively impacting profits and not hitting the mark with consumers.
A better way to innovate.
Fintech enablement provides a better way to innovate. This allows organizations – not just financial institutions, but any digitally operated company – to build and launch new digital products without the need for a complete digital transformation. FinTech Enablement is a full-stack technology solution that works with existing legacy systems and can transform them into efficient, automated ecosystems. A hyper-personalized customer journey is simplified, which not only better caters to existing customers but also wins new ones. Backend processes can be automated, thereby saving time, resources and money.
Traditionally, there are three ways for established financial institutions to innovate: innovation labs, incubators/accelerators, and venture capital investments.
Innovation Labs allow established financial institutions to stay on their steady course while building small, innovative teams that can develop agile digital products that match their nimble digital competitors. Fintech enablement solutions enable these small teams to build and launch innovative financial products that meet market needs without relying on legacy systems and technical support teams.
By finding a way to balance legacy institutions with agile innovation, traditional financial establishments can reap two important benefits.
- Meet customer expectations – especially GenZ, who expect seamless technology in all aspects of life.
- Reduce Costs – Digitally savvy financial institutions will see dramatically lower costs than their competitors.
Fintech enablement is a better way for established financial institutions to innovate, modernize their operations and meet customer expectations. By adopting this approach, they can create and launch innovative digital products without the need for a complete digital transformation.
Currently dealing with old legacy technology? Book a demo to learn about Fintech Enablement Platform by FintechOS Here,
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