Innovation and the ability to offer more meaningful products and services have become key differentiators for financial institutions. Yet, innovation poses a significant challenge for FIs, especially concerning resource management and the time and cost to modernize legacy architecture.
Aite-Novarica Group’s Strategic Advisor of Commercial Banking & Payments, Gilles Ubaghs, and FintechOS’ VP of Product Marketing, Mike Hughes, sat down to explore the emerging concept of fintech enablement as a pragmatic solution to these universal challenges.
Here are the key takeaways from their conversation.
Fintech Enablement & Modernization: 6 Key Takeaways
The financial services industry is undergoing a transformation as customer expectations shift and innovation becomes increasingly important. However, traditional strategies for innovation are often resource-intensive and leave organizations dependent on third-party providers. In order to meet these changing needs, core modernization is critical.
1. The shift in customer expectations is having a transformative effect on financial services.
Financial services are facing a major shift in customer expectations, driven by advancements in technology and changing consumer habits. Customers now expect seamless and personalized experiences from financial institutions, making it more important than ever for FIs to invest in modernizing their infrastructure.
2. Core modernization is essential, but a full “rip and replace” approach is resource-intensive and risky.
While core modernization is critical to keeping up with changing customer expectations, a full “rip and replace” approach can be resource-intensive and carry high levels of risk. This approach can lead to significant disruption for existing clients, as well as costly doubling of resources. Financial organizations must find a balance between modernization and stability without relying on a full replacement of their existing core infrastructure.
3. Financial organizations must break the cycle of technical debt to keep pace with innovation.
Technical debt accrues over time and eventually must be paid for, often at a great cost. Financial organizations must break the cycle of technical debt to keep pace with innovation, as the speed of innovation is only set to increase.
4. A fintech enablement platform can reduce complexity and accelerate innovation.
A fintech enablement platform is a technology infrastructure that acts as an operating system to enable rapid and efficient innovation of digital products and services. These platforms are designed to reduce complexity and accelerate the launch, servicing, and expansion of financial solutions and new customer journeys. Fintech enablement platforms allow financial organizations to drive innovation independently, without being dependent on third-party providers. This independence allows financial organizations to better meet the changing expectations of their customers.
5. Embedded finance is growing and requires new customer journeys, workflows, and product design.
The growth of embedded finance means that financial organizations of all types need to consider new customer journeys, workflows, and product design. This will help FIs stay ahead of the curve in a continually changing market and meet the changing needs of customers.
6. Fintech enablement platforms allow financial organizations to future-proof their technology investments.
By leveraging fintech enablement platforms, financial organizations can future-proof their technology investments. These platforms provide the flexibility and agility needed to respond to the ever-changing demands of customers, and the financial services industry as a whole. Financial organizations should partner with fintech enablement platform providers who have a proven track record of delivering innovative solutions. This partnership should focus on working together to modernize core infrastructure and create new, customer-focused journeys while reducing the risk associated with technical debt.
In order to be effective, a fintech enablement platform must be scalable and able to continually evolve as the market changes. Low-code and no-code tools can help break down silos and free up technology resources, allowing product and strategy teams to drive new capabilities.
Ultimately, change management is about momentum. Financial organizations should adopt a rollout strategy that demonstrates value quickly and repeatedly in order to drive ongoing innovation. Whether you’re a large financial institution or a new market entrant, a fintech enablement platform can help you achieve your goals. Start anywhere and make anything – the possibilities are endless!
Want to learn more? Watch the full webinar on-demand.