How retail banks can securely disrupt the market

With customers demanding personalized experiences plus increasing cost pressure from competitors, bank executives are leaning on their IT departments to find agility and efficiency improvements.

  • Published: 21-04-2022

  • Related Category: Security Operations

  • Type of Content: White Papers

  • Owner: Fortinet


Inspired by a tsunami of disruptive digital innovation, the last decade has seen perhaps the most rapid evolutionary change ever within the retail banking system. A combination of greater expectations from customers and the sustained development of the financial- technology (fintech) sector, banks are now unrolling new, cutting-edge solutions to enhance the customer experience.

For retail banks to succeed in this increasingly digitised landscape, priorities include simplifying their legacy systems, updating their information- technology (IT) operating models, taking their software-as-a-service (SaaS) credentials beyond the cloud, adopting robotics and artificial intelligence (AI), and preparing the architecture to connect to “anything, anywhere”.

Legacy banking systems and infrastructure are regularly found lacking in both meeting the demands of today and future trends of tomorrow.

There’s also a wealth of unlocked value to be extracted from siloed business unit data within banks’ operational systems to help them service customers and grow business.

Newer systems are more capable of supporting the latest digital products, services and applications that banks seek to provide to their customers. This means that by shifting towards such systems, banks can optimise the user experience and operate in a more flexible and dynamic manner.

Those banks who streamline their operations reduce the considerable costs of maintaining such systems and by adopting the latest technologies will benefit from the improvements that those innovations offer in terms of utility as well as reduced risk and strengthened security.

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Fewer than 20% of executives feel well-prepared for the future1

The new market drivers

Differentiated and seamless customer experiences

Customer experience has reached a paramount level of importance in recent years. Heightened customer standards are being driven by advancements in technology and commoditization of services. The implications for banks is clear – if you want to maintain loyalty among your current client base, you must build an improved omnichannel customer experience and use it as a competitive differentiator.

Online and mobile banking services must be adapted to the digital world as real value resides not only in the banking services you provide but also in the way you deliver them. Customers want to access your banking services anytime, anywhere, with an experience that is immediate and simple. In turn, your bank employees require a 360-degree view of the customer that incorporates every channel touchpoint so that they can provide a more personalized experience.

To drive these customer-centric initiatives and develop a true omnichannel experience, you need to strategically invest in technology that delivers an integrated, automated, agile, and highly available environment for both your customers and employees.

Answering FinTech disruptors: an imperative, not just an ambition

Banks must rethink their business models to reinvent themselves and compete in the future banking market. It is a future driven by open practices and a sharing economy.

Traditional banks are falling behind their digital- native competitors in the innovation race. Accrued technical debt and layering new technology on legacy infrastructure hampers agility.

According to the latest World Fintech Report, only 21% of banks say their systems are agile enough for collaboration with fintechs 3. Furthermore, digitalisation efforts driven by business units working in silos can lead to duplicated effort, with costs and complexity quickly escalating as new services are introduced.

Banks that move from siloed and vertical models to more modular and platform-based ways of working (e.g. Banking-as-a-Service, Banking- as-a-Platform) will be able to successfully create new revenue streams, augment their existing offerings, and reach new customers and markets. For example, banks that sell their infrastructure as a service to others, and leverage the cloud to do it, will benefit from significant new source of revenues.

61% of bankers believe a customer-centric business model is very important, only 17% are very prepared for it

The new market drivers

Gain agility and efficiency

With customers demanding personalized experiences plus increasing cost pressure from competitors, bank executives are leaning on their IT departments to find agility and efficiency improvements. This includes;

  • Eliminating legacy technology debt and achieving future ready systems
  • Leveraging data, an agile core and intelligent IT to overcome existing challenges and become a customer-centric, efficient, platform-driven business
  • Reducing provision time for new facilities and contributing to branch transformation into smart branches with deployment of IoT-enabled solutions
  • Implementing a shared-services model for activities such as online and mobile banking, customer retention and customer analytics

Customer intelligence driving revenue growth and profitability

As customers become more connected through social media, they are more demanding and less loyal. To remain relevant, banks must leverage their data to engage millennials with the right offer when the relevant buying opportunity presents itself.

Banks are looking at mass customization in order to deliver a far more personalized customer experience. To achieve this they will have to make sense of a torrent of data that defies human comprehension. The requirement is to gather, interpret and present massive quantities of data in real time. This is where big data, artificial intelligence and machine learning come into the play.

In a regulated world, this cannot be done without proper data control, whether hosted in the cloud for collection, processing and provisioning, or held in private locations to better protect your most sensitive data.

The transfer of large datasets is often required across geographically disparate locations. And these transfers need to be protected from security risks. To answer this need, organizations must establish an approach to authenticate and authorise access to applications, specifically in the cloud.

Those focused on growth should deploy a full range of interventions, including productivity improvements, stronger risk management, and better stewardship of equity capital 4

The challenge for banks isn’t becoming ‘digital’– it’s providing value that is perceived to be in line with the cost. Or better yet, providing value that consumers are comfortable paying for5

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