A technology expert who has led digitalisation projects for large banks including TSB and Together Money has warned that modernising financial services should be a priority, or banks risk losing a younger customer-base for good.
With the U.K. home to around twenty FinTech unicorns, younger audiences have been won over by the slick design and web-self service of disruptor banks like Monzo. Tom Holt advises traditional banks on ways to integrate modern features, leverage brand loyalty and stay competitive.
The challenged for established finance is that banks with deep-rooted systems cannot meet the agility of FinTech competitors overnight. One of the biggest obstacles arises with integrating modern services is often gradual, especially when using tools like AI and chatbots.
In addition, financial services need to master the customer experience to build trust. Certainly the ‘one-bank-for-life’ concept is losing relevance across generations. This means traditional banking services face a battle to retain their customers.
At the same time, many startups are at a disadvantage. This includes developing customer trust which gives them leverage over their innovative counterparts. Whether it is regulatory and license issues or public mistrust and data concerns, there are plenty of factors holding customers back from challenger banks.
According to Tom Holt at digital experience and technology agency, UNRVLD, financial firms must face and meet various challenges in order to stay relevant in landscape of disruptors.
The first issue Holt warns of is the complexities of digitalising without a sound strategy in place. He says: “Core systems in large financial services firms are often decades old and rooted in complex, disconnected legacy systems. Replacing these systems altogether may prove unrealistically expensive, while unravelling or rejuvenating them should be approached with caution.”
On the one hand, banks need to achieve the speed, agility, and flexibility innate to a FinTech. On the other, they must continue managing the scale, security standards and regulatory requirements of a traditional financial-services enterprise. Holt cautions that simply making things easier does not facilitate digital banking.
Holt is of the view that implementing new technology into financial services should be gradual. Holt explains: “This requires a complete rethinking of everything you thought you knew about banking. Using composable solutions and an agile engineering approach, we can create API access to core systems, and seamlessly integrate modern services, from AI and Machine learning to chatbots, into a bank’s technology estate.”
Holt explains that this also means banking organisations adopting a new culture, mindset and operational model, decentralising development, designing low code ‘fusion teams’ and adopting composable solutions to leverage cloud-based innovation.
Reaching out to an adventurous younger demographic is also important. Holt says, ”Financial services need to think customer first to evolve new, nimble applications that differentiate them from their peers and the new market entrants. Digital-first financial services are winning market-share with innovative customer offers built on agile digital platforms.”
