For several years now, banking entities have threatened their business by new “big tech” and “fintech” players who gain market share based on their greater flexibility and operational agility. And they attacked some of the most profitable segments of the value chain.
In 2020 and the years to come, financial services technology must ’embrace interruption’ in a context in which disruptors will drive the new business model. In a recent study, industry respondents said that 25% of their business could be at risk of being lost to independent fintech companies within 5 years.
Also, the estimations in which the collaborative economy will be integrated into each part of the financial system, digital becomes the mainstream, and customer intelligence will be the most important predictor of revenue growth.
In this context, how do you find financial entities of profound transformation? Beyond regulatory limitations, which put some limits on banks’ efforts to face the challenges of transforming and innovating, many entities have old.
And at this point, inefficient systems elaborated obsolete architectures, and technologies such as common business-oriented language (COBOL), and mainframe systems which do not allow us to be in tune with these times of the “economy experience.”
Spinal Column
The core banking (or bank management system) is the fundamental computer tool –something like the spine of the IT schemes of financial institutions- that processes bank transactions and handles customer data.
For fulfilling this central role, the core banking is referred to as a mission-critical system and includes bank control or bank audit software. For years the banks’ strategy was to update or patch these solutions. But this, far from adding flexibility, increases complexity.
Customers are looking for omnichannel, personalized, and agile service. And financial institutions need tools focused on them, to understand their behavior to adapt the offer to their preferences and needs.
The core banking systems must be efficient in terms of the use of resources, agile to facilitate adaptation to new market trends, and scalable to allow growth. It also helps the integration of the different disruptive technologies that make a difference, such as analytics, big data, and blockchain. Besides, they have to respond to the regulatory framework dynamically, depending on the changes that occur.
As you can see nowadays, banks must adapt to growing needs. And in such a context, the flexibility of the platform is essential, since it will allow them to build the applications and develop the innovative services they need at the right time.
However, in many banks, there is a high level of heterogeneity and complexity at the IT level: customized solutions, satellite systems, and historical structures.
Many times the banks’ platforms are self-developed or personalized that they no longer resemble the original product purchased.
Also, many of these systems were built to digitize processes on paper, which worked in another scenario when there already were branches and regional offices.
Time to simplify
Entities need to reduce the complexity of this landscape. Traditional banking infrastructure does not allow you to react fast enough to take full advantage of the opportunities presented by changes. Ideally, banks could adopt new efficient, and flexible digital core banking platforms. But these migrations often carry operational risks, they are not always successful, and also, the investment has a long-term ROI.
State-of-the-art tools focus on providing the flexibility banks need to adapt to a changing and challenging market.
At Accion Point, we promote the Bantotal system for banks, a solution that adapts to regulated financial entities and allows incorporating innovations for customers.
We act as implementers of the Bantotal software solution for banks, providing services in our capacity as partners.
From a technological point of view, the Bantotal developer’s team attempted to create a multiplatform, extensible, and modular system, in which both involve a significant place.
Its architecture is service-oriented, which provides the flexibility to innovate at the level of business models and products and services.
It also facilitates integrations without excessive costs and includes developments in mobile banking, a digital wallet, and digital channels.
Transforming the IT spine of financial institutions can be a far less complicated and costly move than is often believed. It is an inescapable process for banks to tune in to the new business scenario. With the right strategic partner and the right solution, change does not have to be conflictive.
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