Year after year, banks are challenged with solving the same problems – operational and consumer experience problems stemming from aging technology, regulatory demands, competitive threats and evolving consumer expectation.
And despite our greatest efforts, digital transformation remains elusive for many banks and the customer experience continues to suffer. The reason is clear as to why banks have been unable to solve these problems: We have been coming at it the wrong way for too long.
At one time, banks were mainly focused on core banking technology and transaction processing. As the industry and technology evolved, banks shifted their focus and dollars from the back end to the front end, investing heavily in modern digital experience solutions for mobile and online banking.
However, as banks eagerly rolled out these new consumer digital apps, new silos formed on the back end and front end that are increasingly widening the gap between back office, banker-assisted and consumer self-service channels. Many banks are now left holding the bag with inconsistent channel experiences, difficulty getting products to market quickly, and an inability to differentiate and innovate.
But we are seeing a shift in the industry, with banks taking on a new perspective in evaluating solutions to eliminate these problems. The front-end versus back-end lens has been refocused on a holistic core-to-customer technology approach that begins with change from inside the bank.
Silos in banking are often driven by different product business lines, each with its own unique system of record, set of processes and user experience to navigate for the back office. The same is true on the front end of the equation. Individual solutions for mobile, online banking, account opening and kiosks are serving up disjointed experiences to customers.
Because of the lack of interoperability between these systems, back-office employees are separated by department, and the resulting inefficiencies force many institutions to focus on maintaining a status quo instead of improving customer satisfaction or gaining a competitive edge. This has become a huge cost burden and major threat to the future of these institutions.
A new architecture is required for banks to remain competitive and profitable. They must unify and orchestrate their cores, processes and products through a common digital-delivery framework. This approach will centralize all of the bank’s processes (historically dictated by individual channel) and pull them into a single API process library to be leveraged equally across channels – back office, banker-assisted, and self-service alike. Only then will truly frictionless interactions between a bank and its customers begin to occur.
According to Forrester’s The State of Digital Banking, 2022 report, 25% of service decision-makers at banks say that their company’s technology strategy is among the biggest challenges to executing digital transformation.
Front-end, digital-banking solutions have been the focus in our industry for years because they drive revenue. However, with service expectations of consumers now evolving faster than the abilities of most banks to solve the mounting operational complexities, customer loyalty and ultimately revenue is taking the hit. A growing number of fintechs and challenger banks in the market has also turned up the heat on traditional banks to rethink their technology strategies more than ever before.
Implementing a modern digital delivery framework can enable traditional banks to unburden themselves from operational silos to launch products faster, deliver modern and consistent channel experiences and, most of all, stay laser-focused on differentiation and driving new revenue streams.
Banks understand the problem and many are beginning to take steps to solve it. Adding band-aid solutions will only continue to perpetuate the problem. The time has come to leverage holistic technology solutions that will unify and orchestrate all of the bank’s processes and products between the core, back office and consumer digital channels – the way a bank should work.
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