We discussed the urgency for financial institutions to undergo a digital transformation and replace the traditional bank branch model. For most banks and credit unions across the US, technology and change management is not a strength. After decades of acquisitions and industry consolidation, these companies find themselves with legacy infrastructure that performs in sub-optimal processes. Beyond the back-office, banks also struggle with providing the modern experience that consumers are accustomed to (from neobanks and challenger banks) — close to 80% admit lacking the tech to deliver quality customer experiences (from Forrester’s Global Financial Services Architecture Survey Q3 2019).

For financial institutions in need of help with new initiatives, digital banking architecture providers (or DBPAs) are a welcomed option in delivering change quickly, with a lower risk of failure. These companies have created a tech ecosystem (cloud-based) in which new capabilities can be added via APIs, similar to how fintechs offer new banking products. A modular-based infrastructure from these providers helps retail and corporate banking divisions easily implement updated offerings. Core banking functionality, back-office processing, data gathering and analysis, and customer experience initiatives can all be executed by these firms.

For banks uncertain how to get started or to taking on too much, DBPAs help leaders handle the complexity of transformation. The goals of increased productivity, efficiency, and modern customer support through technology are all within reach. Other priorities can focus on accessible customer data across multiple divisions and channels, and removing legacy waivers on certain user account types.

Ultimately, financial institutions have a viable solution in a banking structure that can flexibly adjust to customer demand, new tech, and regulatory updates.

In moving forward with digital transformation, select banks and credit unions have chosen to launch a separate brand or organization that can market new customers and slowly migrate existing clients. Current customers wouldn’t feel coerced to make the change right away, and can stay with their traditional account in the near-term. As more clients do migrate to the new brand, the legacy bank can transition out and all resources of a bank consolidate under the new org.

In choosing a DBPA, financial institutions may be hampered by executive leaders unfamiliar with technological change management. An open mindset and approach to tech can boost the organizational and cultural change that needs to take place after engaging a new provider. Executing on digital transformation requires an entire company to step up and make it happen. Some of the top DBPAs in the industry include:

• EdgeVerve;

• Finastra;

• FIS;

• Intellect Design;

• Arena;

• Mambu;

• Sopra Banking Software;

• Tata Consultancy Services (TCS);

• Technisys;

• Temenos;

For these vendors, a concise offering is recommended over an assorted or general coverage of functions in the banking space.

Overall, the banking software industry as a whole is becoming even more crowded with rapid change and widespread availability of solutions. With limitations in branch services from COVID-19, all banks and credit unions need to decide and push forward now on digital transformation strategy.

What took years of evaluation, review, and indecision in the last decade is now being acted on and executed in just months. This new decade will show the winners as financial institutions successful in setting strategic objectives and executing on all their transformation efforts faster than their peers.

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