Banks are struggling to keep customers engaged in an unpredictable economy. While banks cannot stave off inflation or ease job reports, they can control the type and quality of support their customers receive.
J.D. Power’s 2022 U.S. Retail Banking Satisfaction Study revealed that today’s banking customers crave support during these difficult economic times. 78% of customers said they would return to a bank that provided this support — and only 44% believed their banks had delivered.
If that’s the case, what support would make customers happy? When asked about personalization, 46% of customers stated they wanted help in avoiding fees. 37% wanted to receive account alerts. Despite these observations, most customers did not notice efforts by their banks to reduce fees. They did, however, notice when fees were charged.
For banks to provide these services, they must harness their own data. Unfortunately, banks are encumbered with decades of technical & organizational debt, slowing down the pace of innovation to a crawl. To succeed, they need to transform.
Banks are encumbered with decades of technical & organizational debt, slowing down the pace of innovation to a crawl. To succeed, they need to transform.
Today 43% of banking systems run on COBOL, a programming language invented an entire decade before a person walked on the moon. Currently, 80% of in-person transactions, and 95% of ATM transactions, still use COBOL. These legacy mainframe systems serve not only as a system of record, but also contain considerable business logic.
Combined, banks have a delicate & twisted web to unravel. Where should they start?
In 2021, McKinsey reported six principles to hasten banking modernization:
- Build data platforms that focus on flexible data access over data centralization
- Modularize the core by migrating bounded contexts to microservices
- Allow customer journeys to lead to the prioritization of system modernization.
- Connect existing systems thru interoperability APIs before modifying them
- Reduce overhead by moving undifferentiated workloads to SaaS / PaaS.
- Build your platforms globally, but allow for local customization
Banks do not need to wait for their core banking transformation to complete before building the experiences their customers require. Instead, customer journeys should be the driving force that helps prioritize modernization efforts.
To build new customer experiences in parallel with a core transformation, an interoperability layer can be introduced to reduce system coupling—allowing for underlying legacy systems to be migrated without impacting the applications that depend on them. As the core is disassembled, modules that are differentiators can be migrated to proprietary microservices atop global platforms. Undifferentiated workloads should seek alternative 3rd party SaaS solutions.
Whether you have already begun your transformation or are just considering it, our team of strategists and technologists specialize in building data-driven customer journeys. We leverage “Bank-in-a-box” SaaS products for common services and work across all cloud providers, platforms, and technology stacks to implement custom APIs. By building an end-to-end FinTech stack, we modernize legacy banking solutions without reinventing the underlying technology.
Lean startups with robust CX
The pandemic caused a second wave of digital banks and for good reason. Forester indicates that in 2022, digital is now the top channel for home loans, and 40% of adults already are or would consider banking with an online-only bank.
The rise of online banks cannot be attributed to consumer demand alone. Today, young companies can launch a “bank in a box” with just a few SaaS technologies. These lean startups are able to operate with a fraction of the IT staff thanks to the low operational overhead of managed services and the simplicity of no-code/low-code drag & drop editors. Unlike legacy banks, startups do not carry the burden of using COBOL for decades. The challenge that newcomers face isn’t business agility, but how to stand out in a crowded room.
Despite the ease of 3rd party services, creating a holistic product from disparate parts isn’t a simple plug-and-play endeavor. To foster the personalized, omnichannel experience that customers expect, you need the right technology integrated correctly. From a user’s perspective it’s vital to have consistent branding and an engaging customer experience from start to finish. Operationally, you’ll need a data platform to harness the insights that guide future product growth and a sustainable approach to software delivery that demonstrates DevSecOps principles.
Efficiencies with DevSecOps
The manual controls of yesterday require a rewrite to prepare for the future. Embracing the DevSecOps “everything as code” movement has yielded improvements to deployment predictability, team velocity, incident response times, and employee satisfaction. Another benefit is the reduced cost of ownership. According to McKinsey, early adopters of DevSecOps policies demonstrate a 20% – 30% reduction in team size.
Customer experience can only be as good as the underlying service’s reliability. DevSecOps principles are a cornerstone of any digital transformation. Building new UX channels and custom microservices with automation at the forefront has proven time and again to provide long-term benefits. These same principles are equally critical when offloading workloads to a 3rd party “bank-in-a-box” SaaS provider.
While leveraging 3rd party SaaS affords significant advantages, it also introduces an additional moving piece. A “bank-in-a-box” architecture creates a system that is the sum of its parts. These new complexities must be included as part of comprehensive deployment, monitoring, and disaster recovery strategies.
Improving experiences—including those of software, operations, and security engineers—is core to our identity at projekt202. Our team of DevSecOps engineers helps clients build & scale delivery pipelines, automate infrastructure, integrate application performance monitoring, adopt cloud, and modernize security practices. We specialize in end-to-end solutions, providing clients with cohesive solutions regardless of technology stack or 3rd party integrations.
The one-stop solution shop for digital banking transformation
Today’s banking customers expect a full digital transformation, ranging from personalization and improved customer experience to interoperability with open banking solutions and digital payment processors.
Whether you’re a legacy bank trying to achieve full digital transformation or a startup ready to disrupt the industry, we can help you build a one-of-a-kind experience.