Traditional processes in banking are no longer relevant in today’s fast-paced digital banking world. The demand for innovation, instantaneous information, faster approval, optimal customer experience, and stricter regulation call for greater automation and intelligence in banking processes. Not to mention the need to harness the massive quantities of data that goes through the banking system.
The effect of digital disruption in the financial sector has been the strongest in the last decade. It is highly exciting to witness new challenger banks with innovative products upping standards and customer expectations. While incumbent banks are still grappling with ways to boost their digital capability by refreshing their legacy technology stack, new challenger banks can hit the ground running with next-generation core banking platforms, giving them greater agility.
Today, most banks are still running on old legacy systems, which are inflexible and disconnected from the evolving fintech ecosystems due to technology limitations. On average, a digital bank with a decent digital and core technology stack is operating at a 10-15% lower Cost-To-Income ratio compared to incumbents.
Understanding the importance of digitalizing your banking platform is an excellent kick-off to power your growth. Let’s look at the key expectations that the next-generation banking platform should possess.
The elastic nature of cloud infrastructure helps banks achieve cost optimization in terms of hardware and infrastructure investment, rationalized against their current growth state. Cloud provides the speed and agility in responding to infrastructure and market needs. By leveraging the Service Organization Control (SOC) compliance, the cloud tenant can rest assured with the optimal security & privacy protection.
APIs will eventually become the new essential requirement for any bank. The emergence of the open-banking concept demands the connectivity of banks’ APIs to the larger ecosystems to provide better service that aligns with the customers’ lifestyle and expectations.
The enforcement of PSD2 in Europe is a great success story in enabling sharing information to cultivate better use of consolidated financial data for hyper-personalized services.
Banking in the future encourages the sharing of data and availing value-add services across the entire industry. Not only can the banks aggregate their financial products onto other platforms, but they would also be able to enrich their service offering by integrating to 3rd party services.
Banks today are moving from data-driven into AI-driven. Having more intelligent insights empower banks with more excellent monitoring, automation, and prediction analysis over their businesses and give customers greater experience and value.
AI technology is getting more mature nowadays. It is designed to resolve specific issues. Common banking use cases include eKYC, Robo-advisory, product recommendation, human decision augmentation in credit underwriting, Anti-Money Laundering detection, Legal document processing, predictive, and prescriptive business performance analysis, and many more.
The banking platform should develop a robust data analytics and AI processing engine as the base to accommodate future requirements.
Reducing development costs and improving speed-to-market is always one of the top priorities for banks. Extensive product factory configuration allows for quick and easy configuration of product settings and maintenance according to the business needs. This reduces product development costs significantly while embedding flexibility and speed-to-market.
A banking platform must be agile in delivering high-quality software with continuous integration at accelerated project delivery timelines. The platform should integrate DevOps tools to enable agility in the built, test, and deployment in a highly automated environment, making it seamless and effortless. The common tools include dependency management, version control, server provisioning, test automation, and server monitoring amongst others.
Test-Driven Development is one way to meet the highest standard of software delivery quality. Deploying test automation tools such as Selenium will yield massive time savings when automating both time-consuming and error-prone unit testing and regression testing processes.
With the Agile and DevOps working model, time to market is shortened for new features and applications.
Cybersecurity is always a critical concern for banks, especially in today’s digital world. The banks have to put in sufficient control to prevent and mitigate the technology risks associated with security. Adopting the secured software development lifecycle (SSDLC) is a way to ensure the optimal software quality and protection against unknown threats.
Banks today need technology enablers beyond just typical transactional banking. A fully digitalized banking platform must exhibit the new capabilities and provide a peace-of-mind, fully integrated solution to start practicing AI-Driven Digital Banking.
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