It’s no secret that many established financial institutions need to modernize their banking technology stack in order to meet skyrocketing consumer demand for digital, personalized contextual financial services.
For such FIs, an incremental modernization strategy offers significant advantages over a wholesale swap-out of an entire banking core–a non-starter for most banks due to the high costs and operational risks, along with a years-long implementation period.
But banks pursuing a phased tech upgrade face a key decision–one that will go a long way toward determining the overall success of a modernization effort as a whole: Where to start on the journey?
According to Galileo Chief Product Officer David Feuer, FIs approaching this question should begin at the customer experience, first identifying points of friction to reduce and/or new capabilities to enable, then working backward to implement the specific tech upgrades needed to support that functionality.
In a recent webinar with the Financial Brand’s Jim Marous, Feuer explained how a bank can use customer experience as a roadmap to ensure its path to tech modernization is impactful, efficient and scalable enough to lead to success in banking’s digital future.
What banks need to innovate at speed
“Thinking about this in terms of infrastructure modernization is a legacy framing,” Feuer said of how banks should approach upgrading their technology. Instead, FIs “should think in terms of solving customer problems and then how to line up the technology to do that.”
By focusing on solving the top challenges customers are facing, a bank “can figure out what pieces… that it needs to change, and how it can change or enhance them in order to launch this new product or service,” Feuer noted. “That’s the better framing; it gets us out of thinking about infrastructure and forces us to think about customers and building a new value proposition.”
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In order to provide these modern banking capabilities at sufficient speed to meet consumer demand, banks need to escape what Feuer called the “albatross of infrastructure,” technological limitations that bog down innovation and lead to missed market opportunities.
One way banks can shed these constraints is by integrating with third-party services via application programming programming interfaces (APIs), Feuer said. Such integrations enable banks to quickly deploy and iterate new high-value offerings–such as buy now, pay later, instant payments and embedded finance–without having to make significant–and time-consuming–changes to their banking core.
“You can then focus on shipping at the speed the market expects, and then migrate your infrastructure at the speed that makes sense for your market economics,” the Galileo CPO noted.
What a bank should look for in a tech partner
In choosing a technology partner to enable the innovation needed to meet modern consumer demand, a bank should focus on a few key criteria, according to Feuer.
First, Feuer said, a provider should embrace and embody the concept of MACH–a principle of enterprise technology architecture that stands for Microservices-based, API-first, Cloud-native, and Headless design.
“Helping banks build applications in a composable and agile way requires those technologies,” said Feuer, noting that this modern paradigm “helps bank developers thrive” and can help attract top developer talent–an increasingly important competitive factor for FIs as banking becomes more high-tech.
Beyond technology itself, a tech enabler partner also should have expertise and experience in a wide range of products and verticals, said Feuer. That’s because FIs increasingly are expected to serve a wider array of functions, ranging from traditional banking, to payments, to embedded finance and beyond.
“Banks are being forced to operate and compete in all of those domains, Feuer said. “And so finding a partner that can provide solutions in those domains is extremely important.”
Want to learn more?
Get in touch to find out how Galileo can help guide your bank’s tech modernization journey.
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