The banking industry continues to evolve at a rapid pace, with new technological innovations helping organisations create better customer experiences, remain competitive in the era of digital finance and stay one step ahead of regulatory challenges. This process of modernisation has been underway for some time, but the current health crisis has forced financial institutions to quickly scale up their IT resources and infrastructure.
In 2018, Gartner had already predicted the slow disappearance of heritage financial institutions, to be replaced by digitally savvy companies by the year 2030. Banks that took a measured approach to digital transformation likely found themselves unprepared for sudden lockdown orders and social distancing guidelines introduced in 2020. However, the true measure of banking modernisation comes down to adaptability and operational resilience.
Image caption: Banks are facing increased competition from digital-native financial services that offer the tools and capabilities today’s consumers expect.
A bank’s ability to bring its systems and applications into the digital age often relies on its size, IT requirements and budgetary limitations. Many financial institutions lacked the in-house expertise needed to rapidly shift operations to a more digital-centric framework.
This challenge is not only a matter of business continuity; customers expect banks to provide the same convenient features and services they receive from technology companies, according to research from Deloitte, which is one reason why online fintech companies have been growing in popularity.
Many core banking systems fill a centralised role in an institution’s broader IT infrastructure. Making changes to any one legacy system or application can ripple across the organisation, leading to operational disruptions, unplanned downtime and unhappy customers.
Another issue has to do with the modernisation process as a whole: Deloitte notes that, until recently, the only option for upgrading banking platforms and apps was a total replacement. However, with comprehensive cloud options available, banks have a surplus of modernisation pathways that can help reduce costs, manage risk and increase speed to market.
Technology alone may not be enough to satisfy all of the customers’ current and future expectations or set them up for long-term success, but it can accelerate organisational change.
While it’s tempting to make the case for banking modernisation solely on the need for operational continuity in times of crisis, it’s important to look at the bigger picture. For example, one study from Business Insider found that 61% of mobile banking users say they would first research an institution’s mobile capabilities before opening an account.
At the same time, the use of banking chatbots and self-service applications has skyrocketed — a 2019 study from Juniper Research estimated that the deployment of chatbots will save the banking industry roughly $7.3 billion in annual customer service costs by 2023. In both cases, the integration of digital solutions can simultaneously enhance the customer experience and reduce operational expenses associated with in-branch operations.
Every bank has its own vision for the future, but achieving performance and customer service goals requires careful alignment between digital transformation and business outcomes. There are a variety of modernisation approaches, but a bank’s starting point, desired IT state and ability to take on risk will play a key role in its transformational journey.
What new liabilities will come with managing a modernised banking system? How will the cybersecurity landscape evolve in response to new banking processes and applications? Why is the current business environment useful for making large-scale changes? Answering these questions will give your institution a clearer framework for managing short-term improvements and securing long-term gains.
When you work with Unisys, you benefit from an approach that prioritises risk management, cyber-resilience, business process orchestration, and the ability to pivot your transformation efforts on demand. We’ll help you assess your digital transformation needs, determine the as-is status of your current IT infrastructure and accelerate your journey toward a more agile, secure banking environment.
Explore our banking industry resources to learn more.