It’s generally agreed that Fintech firms are already playing a significant role in shaping the banking platform of the future - largely because long standing financial institutions are constrained by legacy systems that are stifling innovation and agility.
But Fintech firms lack the customer base of the banking industry and banking firms have the advantages of stability, trust, experience navigating regulations and compliance requirements, and access to significant capital.
“To be truly digital, banks must pair an emphasis on customer-facing capabilities with investment in the technical, architectural, analytic and organizational foundations that enable participation in the financial services ecosystem.”
Gartner, Hype Cycle for Digital Banking Transformation, 2015
Banks need to become platforms that support the applications and services their customers want to use. They need simple, user-friendly, and reliable interfaces to offer developers and partners the opportunity to innovate. And they should look to the FinTech community for inspiration around the digital business apps that can help maintain a competitive edge and improve customer engagement and satisfaction.
Overcome Legacy IT Restrictions
Unfortunately, long-standing financial institutions are constrained by legacy backend systems that were not designed for today’s digital economy. Often reliant on enterprise architecture technology that ably served internal integration needs for two decades, IT leaders are now unable to effectively deliver cloud and mobile integration that users of today expect.
Over the years, technology within financial institutions has largely evolved with an add-on mentality. As new technology is developed, point-to-point integration has been used to connect a new solution to each existing application. This method is ineffective, and adds complexity. For example, the integration of 20 applications using a point-to-point approach could involve the creation and maintenance of 100s of individual interfaces.
‘Platform-ification’ of Banking
A new approach to banking technology uses an application integration framework to overhaul the way individual solutions are connected, supporting comprehensive, real-time information sharing. This advanced integration environment brings together legacy and cloud services to create a new digital banking platform.
An application integration framework operates behind the scenes, and yet it can make all the difference in delivering a digital customer experience. And for a bank’s IT staff, it could mean being saved from a “rip and replace” event by instead extending the utility of current banking technology into a platform with the flexibility to continue meeting their evolving needs.