In today’s fast-paced world, digital transformation isn’t just a trend; it has become key for survival. The banking sector now stands at a crossroads where embracing cloud-based platforms and collaborating with specialised third parties is not just an option, but a necessity.
Banks often become bogged down with legacy systems that hinder growth and become a liability. The way forward for the banking sector is undoubtedly to be in digitalisation and cloud technologies, according to a whitepaper from innovation consultancy Zühlke Group.
This shift in the banking sector towards new technologies enables data-driven decision-making and personalised customer experiences, among other benefits essential for boosting engagement and loyalty.
One important way that banks are innovating is within the framework of ‘financial services ecosystems’. That refers to collaboration models between different financial institutions wherein each is able to leverage their distinct and complementary offerings. This can help to offer more seamless customer experiences.
“A well-functioning ecosystem requires a modern banking platform that is, ideally, composed of cloud-based services. That way, it can enable the intricate integration and orchestration of product offerings and customer experiences among participants to ensure security, integrity, and resilience,” according to Maurice Roach, managing director for Financial Services UK at Zühlke.
If traditional banks hope to keep up with a changing industry, it is important to prioritise new collaborations within a financial services ecosystem. It can help banks to be more competitive, innovative, and allows better integration with third parties.
“By leveraging partnerships, new channels, and modern technology solutions, you can address these challenges and become more agile, evolving faster to meet the ever-changing customer needs. The financial services ecosystem allows you to do so most effectively,” said Zühlke Former Principal Business Consultant Rasha Hamdan.
Build or buy?
In order to make this leap into innovation and embrace of an ecosystem approach, the first step is to develop a viable strategy. Following that, people and culture will need to be the main priority, considering big changes in any organisation will require good communication, motivation, and clarity on end goals.
Next comes a decision on ‘building or buying’: In other words, if the new technologies and services to be offered will be built in-house or outsourced to a third party. There are pros and cons to both routes and some banks may choose both buying for some parts of their business and building for others.
Above all, it will be important in the medium term for banks to expedite migration to the cloud, as cloud technology reaches new levels of maturity and these tools become increasingly essential for business to stay ahead of the curve.
“Most traditional banks are currently on a hybrid cloud model or are migrating away from what they have on-premises as many understand the value of creating a strong digital core, accessing API ecosystems, and getting rid of expensive and cumbersome legacy platforms,” explained Roach.
“However, it is important to remember that with the cloud, the right approach is essential. Just like any other technology, cloud implementation and maintenance come with challenges.”
