Banking technology innovation is reshaping how financial institutions operate and how customers access financial services. Mobile devices, cloud computing, APIs, and other emerging technologies are enabling banks to move beyond traditional branch-based models and provide customers with more convenient digital experiences.
For financial institutions, however, innovation involves more than simply adopting the newest technology. Banks must build flexible technology environments that allow them to respond quickly to changing customer expectations while maintaining the security, reliability, and stability consumers expect from their financial providers.
Technological innovation has revolutionized the banking industry. In the past, banks were limited to a brick-and-mortar model, requiring customers to come into physical branches to conduct transactions. Today, banks are increasingly moving to a digital model that offers 24/7 access to account information and management tools. This shift has made banking technology more convenient and accessible for customers, as well as more efficient for banks. In addition, technological innovation has made it possible for banks to offer new services such as mobile deposits and person-to-person payments. As the banking industry continues to evolve, technological innovation will play an increasingly important role in shaping the future of banking.
Banking Moves Beyond the Traditional Branch
The changing nature of what it is “to bank” has been going through profound transformations, not in the least have been the movement of activities that had to be conducted in person in a branch to one’s own handheld smart device. The article lays out the comparison of two establish Financial Institutions and how they have been adjusting to the expanding integration of information technology to their industry practices.
Cloud Technology Creates New Opportunities for Banks
Capital One is an innovator in the banking space. The first US bank to move all of its core processing to the public cloud, Capital One has, for years, adopted a cloud-first and open source-first approach to its software development. It has followed an open API strategy and is at the forefront of the adoption of microservices and containerization in the banking industry. Bear in mind that Capital One works in an industry that, if you believe the hype, simply cannot move to the cloud, cannot embrace agility, and need not look for innovation. Bucking the trend, indeed.
Agility Becomes a Competitive Advantage
Mercator Advisory Group recognizes it is not necessarily the rate at which a FI implements technological innovation to better align with consumers that make a difference in the marketplace, but taking advantage of the agility afforded by IT is a significant factor. The pace of change in physical and virtual environments demands more FIs incorporate capabilities that allow them to be more responsive to consumers, while retaining a steady and reliable service that consumers look to FIs to provide. We delved into this idea in our report Banking as a Platform: API Technology Presents Opportunity to Financial Institutions.
The evolution of banking demonstrates how significantly technology can change both the customer experience and the underlying operations of a financial institution. Services that once required a trip to a branch can increasingly be completed through digital channels, while technologies such as cloud computing, APIs, microservices, and open-source software give banks new ways to develop and deliver financial products.
Capital One’s approach illustrates how financial institutions can challenge assumptions about the limitations of legacy banking technology. Moving core processing to the public cloud and embracing an API-driven strategy can provide greater flexibility and create an infrastructure capable of supporting continued innovation.
Yet successful banking technology innovation should not be measured solely by how quickly an institution adopts new tools. Financial institutions must determine which technologies genuinely improve their ability to serve customers and respond to changing market conditions. The objective is to combine technological agility with the reliability consumers continue to expect from their banks.
As physical and digital banking environments become increasingly interconnected, flexible technology infrastructure will become more important. Financial institutions capable of adapting their systems while maintaining dependable service will be better positioned to respond to evolving consumer expectations and take advantage of new opportunities created by the continued transformation of banking.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
Read the quoted story here
