As today’s early-stage technologies evolve into mainstream offerings, retail banks will have to reshape their customer experiences to match. The prerequisite infrastructure is a core banking platform that supports customer data consolidation, real-time channel interfaces and rapid creation of new products and services.
Think back to the early days of self-service ATMs, internet banking and mobile banking. Each was once a “nice-to-have” technology that soon became a “must-have” technology.
The accelerated pace of technology adoption has sped up the need for a competitive response. Early-stage technologies such as augmented reality, biometric authentication, digital money, gamification, mobile wallets and wearable computing have the potential to optimize legacy business practices and enable new business models. They may provide new market entrants with useful entry points over slow-to-react incumbent providers. Some technologies will be game-changers and others may fizzle out but there’s no way to know which is which in advance.
Banks can choose how they want to respond to early-stage technologies. One approach is to become an early mover, aggressively embarking on pilot projects to get an early competitive edge. A more cautious approach is to study these technologies, keenly watching the progress, outcomes, and lessons learned from the early initiatives of others. For the vast majority, it’s just business as usual.
Early movers tend to build tactical solutions that become tightly coupled to implementations of early-stage technology. This becomes hard to maintain as the market moves to the mainstream. Multiply this problem by each of the early-stage technologies being introduced and you may earn a reputation as an innovator but at the significant cost of an expensive integration challenge.
The cautious, study-first approach gives an organization a better reaction time than the business-as-usual approach, but if you only dip your toe into the water after someone else has been successful with a technology. And you may be late to the game by the time you figure out how to implement.
As for the business-as-usual approach, organizations that ignore technological change have the pleasure of being right – until they’re proven wrong.
The ideal response combines the speed-to-market of the early mover with the discernment of the cautious type. That combination is possible through an approach that puts business processes first.
That’s to say, you shouldn’t have to build or deploy a separate, standalone solution for making payments through, say, wearable computing devices. Instead, build fundamental capabilities that can support multiple contexts for data delivery, whether that’s Google Glass, smart watches or any other form factors that may take hold.
Before you embark upon any attempt to harness early-stage technology, create strong capabilities in the following areas:
Customer data consolidation. Capture both structured and unstructured data in a centralized data repository and perform analyses to generate detailed, real-time insights that drive customer value.
Real-time interfaces. At every discrete stage in business processes, ensure that you can share data with internal and external channels using real-time connectivity.
New products and service creation. Build the capability to create, test, and roll out new products and services at high speed, with the ability to integrate new products into existing bundles and delivery channels.
These are the fundamentals to making your response to early-stage technologies faster and more flexible. For virtually any customer-facing technology that can be invented, your role as a financial institution will be to get the right data to the right place at the right time, wrapped in a product or service that customers will be excited to use.
With these capabilities, you don’t have to pick winners far in advance of mass adoption. Instead, you can watch the market carefully, follow through on the technologies showing the most potential and then go to market fast enough to reap the rewards.
Jeannette Kescenovitz, who leads development of banking-as-a-service at Finastra, joins us on the BAI Banking Strategies podcast to share her views on how BaaS might grow its presence at U.S. banks and credit unions this year.
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