But They Can Be
“There are 2.5 quintillion bytes of data created each day at our current pace, but that pace is only accelerating with the growth of the Internet of Things (IoT). Over the last two years alone 90 percent of the data in the world was generated. [1]”
The tech world is growing exponentially and the financial services industry is not immune to the wants and needs of a growing digital, cloud-enabled future. Retail banks in the United States have been reticent to adapt and there is an ever-growing influx of FinTech companies happy to fill in the gaps. The increased interest in cryptocurrencies, open banking/neobanking, and Banking as a Service (BaaS) is evidence there is a need for an expedient investment in digital, cloud-enabled innovations.
What challenges do retail banks currently face?
“The financial services industry has always been among the heaviest users of mainframes, and the cloud-versus-mainframe decision remains a matter of debate.[2]”
In the early 2000s, retail was faced with growing technology concerns caused by the introduction of e-commerce—secure transactions, discoverability, digital architectures, and digital payments. Financial services are finding themselves in a similar situation, yet US retail banks have been surprisingly slow to upgrade their infrastructures.
Banks find themselves wrestling with the decision of either modernizing their existing mainframes or retooling to a cloud-based infrastructure. Although a taxing process, there are clear advantages for retail banks integrating a cloud-based architecture when it comes to performance, customer experience, the introduction of artificial intelligence (AI), predictive analytics, and modern data science.
A significant number of the Emerging Affluent were never educated on proper finance management or how to grow wealth. They are discovering new and innovative ways to participate in a global economy and build wealth.
Why should retail banks integrate cloud-based architectures?
The ultimate advantage of retail banks retooling to a cloud-based infrastructure is being able to keep up with current trends.
Right now, there is an urgent need for financial institutions to re-focus on educating customers, transforming into institutions that educate and explain how to manage and grow wealth.
Today, there is a growing segment of customers, the “Emerging Affluent,” who don’t feel served by traditional banking.
A significant number of the Emerging Affluent were never educated on proper finance management or how to grow wealth. They are discovering new and innovative ways to participate in a global economy and build wealth.
Retail banks need to figure out how they can provide the most value to this growing number of customers amongst others.
How can retail banks integrate cloud-based architectures?
One way retail banks can better cater to customers is to increase reach and performance. To do this, they will need to move from mainframe technologies to cloud-based architectures. In addition, the foundation of the modern financial services system will need to be built to anticipate any future changes. This may come in the form of creating relationships with emerging FinTech companies.
Partnerships with FinTech companies will allow retail banks access to FinTech services through APIs and plug-and-play add-ons. In return, granting customers easy access to unique products and services. These cloud-based architectures will allow US retail banks to provide financial services such as open banking/neobanking, Banking as a Service (BaaS), and investments/use of digital currencies.
What can US retail banks do differently?
The world around us is getting smaller and changes in the financial industry are occurring worldwide.
US retail banks have not modernized their systems and are currently being left behind in the global market. Europe has begun developing open banking concepts. China, India, and Sweden (to name a few) are on their way to testing legitimate cryptocurrencies.
But there’s good news. Many of these technological updates are not new. There are almost two decades worth of creating new and efficient ways to master cloud-enabled architectures. API-connected services are commonplace, cybersecurity is a national advantage, and “Mobile First” customer-centric design is becoming standard.
The future is here. All US retail banks need to do is adapt.
If you’re ready to start the conversation about how you and your organization can begin preparing, get in touch. We have years of experience in helping financial services of all sizes transform and face the future.
[1] “How Much Data Do We Create Every Day? The Mind-Blowing Stats Everyone Should Read” Bernard Marr, Forbes
[2] “Why some banks still lean on mainframe” Penny Crosman, American Banker
