According to research by Bank Administration Institute (BAI), “83% of financial services organizations feel an increased sense of urgency to implement digital initiatives in fear of falling behind.”
Even more specifically, community banks and credit unions need to embrace the digital transformation to compete with larger financial institutions (FIs) who are leading the way.
Be sure to watch our webinar! Migrating to a New Payments Platform? What You Need to Consider
Banks who have not yet embraced the digital transformation risk falling even further behind. This lag in technology will inevitably result in customer attrition as account-holders seek out innovative and flexible products and banking solutions that meet their needs. In fact, a OneSpan survey report found that “eight out of the ten millennials—now the most populous demographic on the planet—will switch banks for a more positive digital experience.”
Additionally, community banks and credit unions—constrained by budget and technology issues—have tried to digitize their offerings by outsourcing digital services, often resulting in a cookie-cutter, one-size-fits-all “solution” that runs counter to customized solutions that customers want.
The Barrier to Innovation?
Not surprisingly, legacy technologies are a barrier to digitization for community banks and credit unions. The OneSpan report found that 59% of respondents say their primary method for opening new accounts is in person at the branch, while 49% say their systems are tied to legacy, manual identity verification processes.
Digital Transformation Is Not Optional
“At a time when new players entering the banking space are 100% digital, conventional institutions need to get on board with their customers’ preferences.” This has never been truer than the current time. If the goal is to improve the customer experience and compete with larger FIs, banks and credit unions should begin the technology transformation sooner than later.
Top 5 Factors
We’ve outlined the benefits and necessity of embracing digitization. This section explains the factors that FIs need to consider when migrating to a new payment platform.
As the pace of the financial services industry continues to change, banks need to leverage technology that can be deployed quicker. It’s important to have the flexibility to configure a payment program quickly and efficiently, driving speed to market and speed to revenue.
- Platform Configurability & Technology Integration Complexity
Customization and flexibility have become important to FIs, and there is a need to reduce complexity while increasing configurability. This enables FIs to respond to changes in the marketplace and better position themselves to capitalize on new features.
- Sustainability & Scalability
FIs need to select a payments partner with a single, global platform that connects the entire payments ecosystem and can sustain all of the changes and adjustments needed to build core banking services, allowing seamless scalability in any market.
- Risk Management Capabilities
Risk management is a must-have for any payment platform. FIs need to ensure that their payment platform meets or exceeds regulatory standards in the banking industry. Not only will the FI benefit from a robust risk management program—the customers will too!
- Servicing Capabilities
FIs should make sure their payments partner offers in-house servicing capabilities that are integrated to deliver a top-notch customer experience throughout the lifecycle.
This top five list came from a webinar that i2c recently held with Matthew Cohn, Partner at Capco, a global management and technology consultancy dedicated to the financial services industry. Be sure to watch the full discussion about these five factors that FIs need to consider when migrating to a new payment platform and how to navigate them successfully.
Ready to chat? Contact us today to learn how the i2c platform can position you to compete with other digital innovators in the payments and banking space.