Digital banking transformation is becoming increasingly important as traditional financial institutions face competition from fintechs and other providers built around modern technology platforms. At the same time, aging legacy systems can make it difficult for banks and credit unions to introduce new capabilities quickly enough to meet changing customer expectations.
Financial institutions do not necessarily have to replace their entire technology infrastructure to accelerate innovation. Partnerships with fintech providers can give banks access to managed services, cloud-based platforms, and other digital banking technologies that can be deployed more quickly than traditional in-house development.
More competitors than ever are offering core services on innovative digital platforms, whilst banks are trailing behind due to aging legacy systems.
With the banks’ reporting season underway, the banking sector is under pressure to cut costs and become more agile than ever before. Fierce competition from disruptive, innovative players, an ever-complex landscape of regulations, and more demands from digitally-savvy consumers are all putting pressure on traditional banks to transform their businesses.
Fintech Partnerships Accelerate Digital Banking Transformation
While it is true that banks and credit unions had generally been slow to adapt to the ever-increasing wants and needs of their customers and members, some have seized the opportunity and ramped-up their digital banking solutions. And these financial institutions are not only large national banks, but also include regional and community banks and credit unions. In many cases, the time-to-market is now quite quick, because of strong partnerships between the FIs and their fintech suppliers that offer managed services and cloud mobile banking variants that can be rapidly deployed.
Digital banking transformation is not limited to the largest financial institutions with extensive technology budgets. Regional banks, community banks, and credit unions can also modernize their services by working with technology providers that offer flexible platforms and rapidly deployable solutions.
These partnerships can help financial institutions overcome some of the limitations created by legacy banking systems while improving their ability to respond to customer expectations and competitive pressures. As digital banking becomes a more important part of the customer relationship, the ability to introduce new capabilities quickly and efficiently could become an increasingly important differentiator for banks and credit unions of all sizes.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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