A simple scroll through today’s news reveals rooted and growing demands—and evidence that the financial industry has fallen behind in technological innovation. This is a seal of fate in the technology revolution. These headlines are usually followed by examples of mobile app latency and dated user interfaces (UI), often followed up with the salesman “quick fix,” or an opinion on the future of banking. But what many articles fail to lean into is why banks and credit unions are stuck here in the first place. This is an important piece of the puzzle.
It’s not that banks and credit unions aren’t investing in technology. In fact, it’s estimated that the industry will spend over $67 billion on technology in 2019 (Forbes). The difference between the typical bank and those forward-thinking companies is identified by the flexibility and breadth of technology services they use and offer to their users. Instead of investing money in the newest or hottest feature, banks should be investing in solutions that give them the flexibility to use any technology they want to use, regardless of their existing systems. This approach combats add-ons that are prone to issues, while preparing a bank for those future needs we don’t even know about yet.
It’s a way of thinking. We call it the Technology Freedom Plan, and it’s built on four basic principles.
With an API-first approach, technology companies build with a goal of making sure their data is easily configurable and accessible in interactions with other products—such as mobile apps—through Application Programmable Interfaces (APIs). This type of solution allows the customer—in this case, the bank—to break down barriers to innovation.
This means no more painful conversions. No limitations for banks and credit unions when it comes to to available solutions because of limited integrations. APIs allow for any bank to work with the technology providers they choose, while providing the best, most relevant solutions to their users.
2.) Own your data
Building the platform your clients are longing for starts with truly understanding who they are. Today, most financial institutions operate in data silos. They only have access to a limited amount of data, and it’s not available for them in a single location. This creates a fragmented view the customer, making it more difficult to get to the root of who banking clients actually are and what their banking preferences actually consist of.
With an API-first approach, each piece of technology a bank uses is configured to easily and securely share information. This means that data is easily accessible across features and offerings. This allows for a better, more complete understanding of user experience with each product or feature, allowing today’s banks and credit unions to more easily determine what enhancements can be made to provide the best possible experience for their clients.
3.) Choose your partners
Gone are the days when financial institutions relied on their core or digital banking provider to dictate which tech partners they could work with. Banks and credit unions should be able to choose which partners to work with based on whether or not they are the best match for their users’ needs. They should also be able to work directly with those companies, rather than worrying about a complicated integration.
With this flexibility, banks are not only able to operate with the speed of other industries, but they’re also able to significantly reduce their development and maintenance costs. When banks have the opportunity to choose the products they provide to their users, they’re empowered to think like technology companies and build the absolute best solutions for their clients.
4.) Create the experience
When banks and credit unions have true technology freedom, we predict a significant shift in how they think about technology change. They will surely shift from a reactive to a more proactive mindset. Instead of waiting for banking clients to ask for the technology they desire or that’s already being offered by competitors, they can instead learn from their users, collect meaningful data, test their options and create a personalized, specific experience for their banking clients.
The financial industry is unlike any other. Regulations and compliance rule, and legacy technology forces limitations to real innovation. These excuses are expiring, however, and the consumer expects all of their apps and vendors—including their banks—to operate and innovate at the highest possible levels.
It’s time for banks to stop investing in technology that makes decisions for them, and instead partner with tech providers that offer flexibility, integrations and ultimately, the opportunity to build the experience that their consumers need—even before they ask for it.