Andrew Beatty | Head of Next Generation Banking, FIS
October 06, 2020
It would be logical to assume that during these uncertain times banks would focus on nondiscretionary spending, tend to their customers and keep the bank’s infrastructure operational. But many banks are doing more, seeing COVID-19 as a lever to start or accelerate their modernization journeys. Since the pandemic began, we haven’t seen any slowdown in bank peer groups who often look at their competition to see what’s happening, and we’ve seen some new transformational journeys start.
Now is the time to move toward a modern cloud-enabled solution. Modernization requires more than updating channel solutions and data analytics, it’s also about the foundation of the banking business: the core banking platform. A modernized core will help you support customers and meet them wherever and whenever they are, ensuring you have the tools and technology to stay ahead of their needs. Banking modernization is also a move to real-time component-based plug-and-play ecosystems – and to a core banking platform that can best support them.
A modern core allows you to easily pivot to new market demands to meet customer needs, and to do it cost-effectively and in a manner that expedites the process. For challenger banks it’s not about what products and services you can create, but how you get them to market faster. The value-added extension of that is using data to understand your customers better: Customers want personalized experiences from their bank, so having that 360-degree view of them – including real-time data – is a key advantage of a modern core.
The FIS Modern Banking Platform framework is founded on application programming interfaces (API First) with an event-based architecture. Analytics engines process events – customer interactions, a change in state to system records, a system action, etc. – as they happen, issuing communications immediately to your bank and directly to customers so that they can receive timely and relevant insights, notifications and recommendations. This is important, because without this framework, as soon as a customer leaves an interaction point, the opportunity to sell or enhance that experience is lost. Event-driven architecture that delivers a real-time experience for your customers today and in the future is imperative. Creating an omnichannel is enabled through an API layer which is real-time through the event architecture and allows you to easily plug in capabilities to the core that extend it and bring new features and functions quickly to the marketplace.
The banking modernization journey provides a prime opportunity to closely examine and improve each and every customer communication touchpoint and flow. Simply stated, banks exist and succeed based on successfully servicing their customers and meeting their needs. However, those needs are ever-changing, especially in the past few months in response to the pandemic. The most successful banks will harness the power of artificial intelligence and machine learning to effectively and proactively communicate, promote customer retention and loyalty, and attain algorithmically derived results. That’s why banks that we’re working with have either already started their journeys or are now considering how they can begin.
A bank deciding to keep playing the waiting game is taking a major risk. An extremely competitive landscape is emerging, with the growth in challenger banks and some nonfinancial institutions that are starting to catch on in the marketplace. “Big Tech” players – such as Amazon, Google, Facebook, and possibly Microsoft – appear as a new form of competition as they enter into the financial services markets. Keeping and maintaining legacy technology constricts growth, and by not making needed modernization changes, banks will struggle to compete with these tech-savvy new entrants.
There is always inherent risk involved when moving an entire technology stack to a new modern core. To help mitigate this risk, FIS works closely with our clients to orchestrate the transformation. We provide our clients the business and technology benefits iteratively and enable the conversion to occur at a pace that works best for them. In some cases, our clients have chosen to transform everything at the same time, while others transform incrementally.
With modern banking platforms, data powers the next-generation banking experience. With traditional or legacy cores, access to data remains a major constraint. Also, most traditional legacy cores focus on accounts and not on customers. A new modern core serves as a customer-centric platform coupled with API enablement and event-driven architecture.
A modern core delivers value through improved customer experiences. By keeping customers at the center of everything, you can deliver the personalized experience they expect. The coming together of real-time payments and a real-time core transaction engine are critical, and we’re seeing demands from our clients to really, truly go real-time.
Most banks realize that, in order to compete, they must change. They want to navigate the future with confidence, knowing they have the solutions to scale their business. Now is the time to invest to help you answer the crucial question, “What’s next?” If you can make the change now, why not get started? For banks that don’t want to be left behind, there is no better time than now to modernize.