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In an increasingly competitive financial services arena, financial institutions are pressured more than ever to meet the evolving wants and needs of their customers. This stress is putting each institution's technology strategy under the microscope. "Are we delivering market-leading innovation and providing a better customer experience than our competitors?" "Are we agile enough to shift with evolving market and customer demand?" Both established and new banks will need to answer these tough questions if they want to thrive in the digital age.
Agility and innovation need to be key drivers for all institutions today as they react to the technology boom shaping consumer demand. And new power players in the financial space are more than willing and capable to meet consumer demand for convenience, transparency and a customised digital experience.
Technology Can Be the Great Equalizer
Technology is the one factor that helps banks (startup and existing) combat the invasion of the digital disruptor. Technology helps banks provide that innovative customer experience that helps to differentiate the "digital-savvy" institutions from the competition landscape.
We already see this happening across Europe as banks in Germany and the Nordics are pioneering the use of innovative technologies to deliver a top-of-class digital experience. Online-only institutions are attracting customers who demand a different type of banking experience — including online-only transactions, and integrated connections to online platforms like Facebook Connect, crowd funding sites and online virtual trading experiences. Further, large banking institutions such as Credit Suisse, Barclays, UBS, JPMorgan and HSBC are constantly seeking ways to unlock innovation by setting up innovation labs and fintech investment funds to attract talented individuals who will help them create tomorrow's digital experiences.
The Challenges of Updated Technology
While generating progressive ideas to meet digital demand is easy, it's often the nurturing, development and adoption of innovation where big banks fall short. The reasons are many, including risk aversion, procurement functions and lengthy proof-of concept and testing cycles. For large institutions, these hurdles deter innovation initiatives and the rolling out of new technology — putting the bank's staff at a distinct disadvantage as they try to emulate the factors that give digital disruptors the edge: customer engagement, transparency, agility and flexibility.
We brought some of the UK's top banking and fintech influencers at the Agiliti 'How to Start a Bank' seminar, hosted in London, dubbed the new global fintech hub, to discuss these challenges. With investment in fintech growing enormously, one of the top discussions among participants was the issue whether or not a bank should build from the ground up or partner in order to keep up with technology.
Regardless of which type of infrastructure they choose to use, we believe banks can work with monoline providers to exceed their customers' expectations and avoid being disintermediated by these new business models.
Whilst there wasn't consensus amongst the panellists whether or not institutions should take this route, it's worth noting that disruptive businesses win by with lower costs and better UX.
Finding the Right Technology Partner
Financial institutions are in the business of banking and delivering products and services that meet their customers' financial needs. Most, however, simply aren't equipped with the resources or technical skills to create a digital banking environment that attracts and retains customers. For many financial institutions, finding a technology partner with the expertise and innovation to create that digital environment is the right course of action.
A technology partner can help the bank affect the real change needed to meet evolving consumer demand. Real-time payments, financial decision making and convenience are just a few areas where a technology partner's innovative solutions can enhance the consumer experience. The right technology partner can also help banks interpret behavioural data about their customers. This critical information provides valuable, deep-level insights into the types of services that really matter to bank customers.
Ultimately, technology is the key to cultivating a culture of constant innovation centred on the desire to put your customers at the heart of everything you do. Institutions that realise the key role of technology will attract customers who recognise that institution as a place where they want to do business. If you would like to learn more, this idea is explored in greater detail in a new Fiserv paper Right Technology Key to Understand and Serve the Digital-Savvy Customer.