Research: Consumers say traditional banks can’t keep pace with their needs over the next 10 years
Just 22% of consumers told us that they feel traditional banks can keep pace with their needs in the next ten years. And much of this consumer concern comes from an area they can’t see — on the IT side.
As the pandemic catapulted us into a digital-first future, the acceleration of business transformations rippled across many industries. For banking specifically, consumers got used to not setting foot in a brick-and-mortar establishment, making digital-first offerings more appealing. This could be a potential problem for traditional banks that can’t keep pace with these new consumer expectations.
More consumers are primed to experiment with digital brands than ever before. According to research from Amdocs, 64% expect to increase their usage of digital banks over the next five years. When we asked why they chose a digital bank over a traditional one, they cited areas like better offerings (38%), an improved customer experience (23%), more personalized offers (25%) and better integration with mobile payment platforms like Apple Pay (27%).
This should act as an eye-opener. As banks look to the future, their past often holds them back. And with that, they are fighting an uphill battle against new, digital-native players that can respond to market demands and provide new offerings more quickly.
Consumers are not confident in the future of traditional banking
Just 22% of consumers told us that they feel traditional banks can keep pace with their needs in the next ten years, which is a stunning view of where these institutions may be heading without the proper transformation journey. And much of this consumer concern comes from an area they can’t see — on the IT side.
Most modern banking interfaces hide fragmented and complex IT environments built from multiple legacy systems acquired or developed over time. This fragmentation extends beyond applications to the data they use. Digital transformation demands the ability to seamlessly access data from all parts of an organization to support projects. Siloed data environments create friction and force staff into manual processes, and this isolation of data slows down internal processes and affects the customer experience.
To solve this problem, banks need solutions that give them faster time-to-market and flexibility in a way that works alongside their legacy systems. The cloud enables banks to create effective collaboration platforms that unite employees and third parties. Fast API-based integration fosters functional applications that seamlessly share real-time data and processes. A combination of fluid integration and cloud scalability allows data to be collected and analyzed in real-time.
The transition to the cloud won’t happen overnight. Banks must move their line-of-business applications gradually, typically refactoring them along the way, while building underlying enterprise service stacks for better integration. This means they must prepare for a mixture of on-premise IT and private and public cloud systems.
Digital transformation, customer experience and security are converging
It’s not enough to just have the right technology. In order for traditional banks to succeed, they need to build experiences that consumers want to have. At the same time, banks are facing customers who have increasing expectations about how their financial institutions handle security. 58% of respondents stated they would consider leaving their bank if they encountered multiple data breaches. In order to succeed, technology, security and experience must come together under a single, joint mindset.
By opening the door to the unlimited use of real-time data for everything, from product innovation to threat detection, banks can now leverage the cloud to meet their customers’ needs for a secure, reliable banking experience. Internally, the result is greater agility and intelligence across the enterprise. And thanks to resiliency and redundancy, the cloud reduces security risks, such as technical failure and data loss. Crucially, using the cloud makes deploying and maintaining leading applications easier.
The move to the cloud is a complex but essential journey
With the modern consumer, there needs to be a constant effort to supercharge growth with fresh banking experiences, and the cloud is a critical aspect of making this possible. However, it’s not an easy task; banks can expect a high degree of initial complexity as they realize how many moving parts exist in a digital transformation program and attempt to manage them.
Our total commitment to the cloud is integral to our company strategy. We’re leading significant cloud transformations across the banking and communications industries, working closely with principal public cloud vendors like Amazon Web Services, Microsoft Azure and Google Cloud while continuously expanding our depth of knowledge by acquiring companies like Sourced.
It’s a complicated journey to make an experience simple. For traditional financial leaders to do this and grow, they must capitalize on the value they’ve created over decades while also building the experiences, agility and innovation mindset required to thrive. Otherwise, they risk being left behind.
Amdocs will be an exhibitor (Booth 3515) at Money 20/20, October 23-26 in Las Vegas.
This article originally appeared on VentureBeat.
