Editor's Note: Banks and credit unions can utilize platforms, people and partners to effectively prepare for the future of digital banking.
When it comes to digital banking, most banks and credit unions struggle with the same pain point: successfully meeting the expectations of customers or members who want intuitive, innovative real-time access to information to enable them to manage their finances. However, before a financial institution (FI) rushes toward one of the shiny objects sparkling in the distance purporting to meet this goal, it must step back and think strategically about its digital banking in terms of its current state and the future goals of the institution.
A successful digital banking strategy, one that can truly stand the test of time, should be centered on a foundational platform that accommodates both the “here and now,” while providing the extensibility, flexibility and scalability to support future innovations. Most platforms available today are legacy architectures that are disparate in nature and don’t scale very well. It’s akin to adding rooms to a house that wasn’t originally built to support new additions.
As IBM has famously asserted, “the business world’s new natural resource is data.” This mantra is starting to be seen in digital banking beyond just the mega-institutions. In order to respond to the digital consumer in an appropriate, timely and personalized manner, the digital banking platform on which a bank or credit union depends will need to be built around capturing valuable consumer data and utilizing an analytics engine to enable consumers to have more meaningful digital experiences. Nearly all of the current platforms in the market lack that capability.
Banks and credit unions should be utilizing their full array of human resources to make collaborative technology upgrades, rather than solely relying on the IT department. It’s important to commit human resources from across the organization to vet the direction an institution is taking in its digital banking channels. This means that each area within the organization must be aware of any new feature, functions and/or platform replacements planned for the future.
Additionally, before any of these types of material changes are made, the employees in a FI from the execs to the tellers should be the first to use them. This not only helps discover items that would potentially confuse or frustrate consumers but it also familiarizes these internal users with the changes so that they can be digital champions and can better help customers and members navigate new and different offerings.
Finally, banks and credit unions must move from thinking of these events as one time “projects” that take place every few years. The current digital banking environment requires a mindset that accepts continuous innovation as the new requirement for any FI that wishes to remain competitive in the throes of a technological revolution. This change in mindset must reach from development methodologies (e.g., Agile) to how budgets are structured to even how individuals are compensated within an institution.
There are a host of vendors who have digital banking products, but not all of them integrate with your platform or share your vision for the future. It is critical to find the right FinTech partnership. Partners that still operate on a 1970’s type schedule that only introduces new releases of their software every 24-36 months are not likely to be viable choices for the present and the future given the pace of innovation.
There is also a tendency for many of the players within the digital banking space to hinder a bank and credit union’s ability to compete by requiring them to contract with the vendor to make even the smallest changes to the product software; e.g., to change the wording in a disclosure statement can take months. To add insult to injury, the vendor will charge the FI thousands of dollars for the work done to make the change.
Banks and credit unions need to seek digital banking partners with platforms that are highly configurable allowing them to control their own destiny by giving them the power to change disclosure statements, branding, colors, page templates and more on their own. Time to market for any revisions or new content can take a couple of hours in the afternoon, depending on the internal processes required to clear them.
Finally, think about where you believe your bank or credit union’s strategy will lead you five years from now and then think about where your customers or members will expect you to be. Most institutions doing this exercise see some considerable gaps between what consumers will expect and what they can offer. If a strategy is not developed, if the correct platform is not chosen, if nothing changes, then these gaps will likely render the bank or credit union irrelevant and the trend of consumers moving both their deposit and loan accounts to the mega-banks will continue. By implementing the proper strategies to include the correct platform, people and partners every FI can be better prepared for the future of digital banking.