A majority of banks today continue to leverage core systems that were originally created for a pre-digital, brick-and-mortar world of bank branches.
Consequently, these heritage systems fall short in the face of real-time digital services that consumers now expect and, in effect, are being taxed beyond their intended purpose.
However, 71% of customers want to access banking services digitally.1 With retail banking services being increasingly commoditized, banks need to provide more value to their customers through distinctive digital services.
To that end, embracing modern digital banking solutions based on open-source standards can offer banks the agility required to boost performance, reliability, and security.
Here are some ways modern digital banking systems solve the shortcomings of traditional systems and improve banking service for all parties involved – banks and consumers.
Better Customer Insights
Providing better user experience and digital services to customers requires an in-depth understanding of their needs and experiences.
Needless to say, data insights are a key variable in this equation. And so is AI and machine learning. Deploying AI in sandboxes is easy. However, scaling and applying actions based on the insights in a repeatable and consistent manner is difficult.
A modern, cloud-powered digital banking platform addresses these issues by integrating data streaming pipelines with AI and machine learning processes, facilitating the deployment of insights that are portable across environments, and that too at scale.
Enhanced User Experience
“Customers want to be provided with personalized experiences, regardless of wherever they may be on their own digital journey,” says Nilesh Vaidya, Global Industry Head, Retail Banking and Wealth Management, Capgemini’s Financial Services Strategic Business Unit.
The most direct result of digital banking can be felt in the user experience. Where legacy systems are usually associated with clunky, non-responsive user interfaces, modern digital banking platforms bring a seamless experience to their customers.
It makes navigating through functionalities easier, thanks to mobile and web-based access to banking features like account management, payments, and customer support.
Improved Digital Services
Accelerating time-to-market often means prioritizing reuse over starting from scratch. In this regard, banks can benefit from a cloud-based digital banking solution equipped with top-tier cloud-native tools, allowing them to concentrate on developing better digital services instead of managing the underlying infrastructure.
The cloud environment also allows banks to utilize autonomous and scalable microservices, facilitating the swift design of new customer pathways and the introduction of fresh experiences. Yes, cloud-native services provide developers with the necessary tools and environments for unrestricted innovation.
Moreover, a cloud platform that integrates automated processes and smart monitoring holistically streamlines banking operations, ensuring reliable delivery of digital services to customers.
Flexibility to Change
Today, many banks struggling with monolithic legacy systems designed in the analog era are seeking a more agile approach. And this transition typically starts with separating their existing banking services, like payments, lending, deposits, and others, into different components capable of evolving independently.
This approach effectively does away with a centralized system and embraces a more open-source philosophy where the bank retains control over all the innovations to the tech stack.
Banks can reduce integration, infrastructure, and operational costs by running these services on a cloud-native digital banking solution that operates across all mainframe, virtualized, and cloud environments. Ultimately, this allows for a more consistent cloud experience.
The security frameworks of traditional digital banking are frequently compromised by vulnerabilities in outdated software and infrastructure, posing significant risks to customer data and transaction safety. These older systems often lag in incorporating sophisticated security features, exacerbating the vulnerabilities.
In contrast, contemporary digital banking platforms offer robust security protocols designed to shield customer data and transactions effectively. These proactive security measures include state-of-the-art encryption methods, advanced identity verification processes, real-time fraud detection systems, and continuous monitoring practices.
Fuelling the digital expectations of today’s tech-savvy customers requires a seamless flow of data across various channels. This means that customizations that are defined using the complex business logic of traditional systems must be modernized to an integration layer, enabling composable offerings.
An open-source, cloud-native, containerized integration approach, made possible by a modern digital banking platform, provides reliable connections for complex data integration, service composition, and orchestration. This integration supports various data exchanges necessary for applications, including API communication and management, real-time message streaming, and data transformation routines, effectively connecting disparate information sources.
Over to You
Creating growth in today’s fast-paced financial landscape requires banks to rapidly adjust to the digital business model.
With expanded service capabilities, improved operational efficiency, better scalability, and more robust security, migration to a modern core digital banking platform can enable banks to launch innovative products, provide seamless customer experience, and maintain a competitive advantage.
iGCB’s AI-powered, cloud-native digital banking platform can help you effortlessly transition to a modern digital banking infrastructure, helping you make the most of a decentralized, open-source, API-enabled, and microservices-based banking model that reduces time to market and improves customer experience in a contextual manner.
Learn more about Digital Banking Platform here.
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