The digital era has revolutionized the way we do everyday banking.
Customers, the primary driver of change, demand seamless, personalized experiences at any touch point.
For banks it has become evident that the winners in the digital race will be the ones who manage to stay closer to their customers in daily activities and important lifetime moments.
Or, as Deloitte describes it, the banks which become a ‘one-stop shop’ for consumer financial and non-financial life.
Fintechs and BigTech have been quick to seize the opportunity and fill in some of the customer need gaps with a multitude of innovative services, such as digital wallets, P2P lending, remote digital advisors, personal finance management, etc.
Globally, 96% of consumers already know of at least one alternative Fintech service available to help them transfer money and make payments (EY).
Meanwhile, many traditional financial organizations still struggle to execute their digital strategies. A whopping 87% of financial institutions even say their current core system cannot even sustain a digital banking ecosystem (Capgemini).
Digital banking platforms have emerged as the solutions that help banks compete in the digital era with a sustainable and holistic approach.
What is a digital banking platform?
Put simply, a digital banking platform enables a traditional bank to quickly transform itself into a truly digital bank.
There are three main directions in which the platform approach empowers bank digitalization:
First, customer focus – a digital banking platform enables banks to deliver the engaging omni-channel banking experiences and personalized products customers expect today, fostering customer loyalty and attracting the new wave of digital-first generations.
Second, internal optimization – it modernizes legacy IT infrastructure, digitalizes and automates business processes, integrates channels, and unifies customer data for a 360-degree customer understanding.
And third, ecosystem readiness – a digital banking platform with a modern, open architecture allows banks to connect to their ecosystem via APIs and leverage open banking opportunities, fintech partnerships, and more.
A future-proof digital banking platform also supports a bank’s long-term digital transformation path through off-the-shelf capabilities and a flexible architecture.
Which are the 6 key capabilities to look for in a digital banking platform?
Choosing the best digital banking platform for your business depends on a combination of factors, including, but not limited to your bank’s digital strategy, technical readiness and budget, vendor criteria, such as the global and local experience of the vendor, the proposed implementation time, the vendor’s product strategy and roadmap, etc.
In this blog, we will focus on the key capabilities of the platform itself as a critical advantage for success in the digital era.
1. Fast time to market with digital initiatives
A best-in-class digital banking platform should give you the speed to respond to ever-changing customer needs.
On the one hand, this translates to having the flexibility to quickly launch digital financial products and services and their variations for target customer segments. The latter can be achieved by managing fees, commission splits, limits and other business rules in the digital banking platform, on top of your core banking system.
On the other hand, a platform should enable the easy creation of more complex digital banking solutions, such as mobile wallets, end-to-end self-service digital channels, and more. A flexible platform architecture, built on microservices and reusable modules, is a prerequisite for that.
2. Out-of-the-box, but configurable digital banking capabilities
This point is tightly related to the previous one. Off-the-shelf digital banking capabilities accelerate time to market for digital projects and provide you with the best practices, coming from the vendor’s experience.
Such building blocks could be customer onboarding, digital identity, strong customer authentication, loan origination, different payment types, workflows, integrations, notifications and more.
Make sure ‘out-of-the-box’ does not mean ‘limited’, though. Choosing a highly configurable digital banking platform will empower your bank to follow its own digital agenda, while avoiding any risky disruption of internal business processes.
Take loan origination workflows – the customer journey could start from a mobile banking app/ a web portal/ via an agent with various form fields and KYC levels. It could include a credit bureau check, embedded pre-approval AI, go through a branch officer, etc., the workflows could vary substantially across businesses, products and channels.
3. Omni-channel customer experience
The physical and digital worlds have been blending and customer expectations could only be met with seamless digital financial journeys across channels.
Omni-channel is more than simply offering multiple access channels. It is about consistent customer service regardless of where the interaction started.
An omni-channel platform allows for the centralized orchestration of customer interactions across multiple touch points, following the principle of create once – distribute anywhere. It is the central hub from which, and to which customer data flows, providing a 360-degree view of the customer.
Omni-channel customer experience is therefore another key enabler to be supported by your digital banking platform.
4. Future-proof microservice architecture
In a digital world, being customer-first goes all the way back to a bank’s technology stack and the ability to quickly roll out new customer-centric initiatives.
Microservice architecture plays a beneficial role in the business of digital banking because it adds flexibility to a bank’s digital transformation journey.
A digital banking platform with a microservice architecture will allow the continuous delivery of software applications, regardless of the size and complexity of the project.
It also enables an organization to quickly innovate on its technology stack, easily scale vertically and horizontally and strategically extend the platform using modular building blocks.
5. Open banking
Open banking is no longer a question of ‘if’, but a question of ‘when’ for banks, especially in Europe.
Among the 60 large European banks, two-thirds are already involved in initiatives requiring the consumption of third-party data, i.e. multi-banking solutions (Capgemini).
In an open banking world, plug-and-play financial products are enabled, and customers have the final word, choosing the superior experience.
When deciding on a digital banking platform, take into account your open banking strategy.
In terms of capabilities, this would mean having a platform that gets you ready for the API economy with functionalities, such as an API gateway and API management, developer portal and sandbox, strong customer authentication, PSD2 compliance, consent management, and more.
Your digital banking platform should enable you to easily integrate with other banks and ecosystem partners to offer value-adding services to your customers through open APIs.
Examples of such services are bank account aggregation, personal financial management services, insurance, remittances or any non-financial service your customers might be interested in (plane tickets, events, loyalty schemes, etc.).
If monetizing APIs is part of your open banking strategy, then the digital banking platform should also allow you to provide paid access for 3rd parties to more advanced data for new revenue streams.
6. Enterprise integrations
A digital banking platform shouldn’t turn into the next legacy technology in your IT landscape.
Instead, it should seamlessly integrate with your core banking system, and with your other existing and future systems, modernizing your infrastructure.
A robust Integration Framework is a key advantage of a digital banking platform, enabling process, channel and system integrations, unified customer data, central monitoring, business continuity, IT asset reusability, and more.
With the help of an Integration Framework, you can connect your business end-to-end to increase its efficiency and focus on what really matters – growth.
Last but not least, consider the digital banking platform’s security and stability – you need to be able to provide 24/7 service availability with frictionless payments, regardless of the market conditions you operate in – be it a mature or a developing market.