The cost-efficiency gains offered by older digital banking platforms are now rapidly diminishing. Given this, most banks have either adopted a modern core banking solution or are planning to do so. Banks that have successfully adopted current-generation platforms generally enjoy significant improvements in their revenue streams due to the cost efficiency offered by these systems. Most importantly, the added efficiencies allow banks to quickly pivot to new markets and business models, effectively laying the groundwork for true universal banking.
These are just some of the cost-saving capacities that could be gained by adopting a universal banking solution:
1.) Greatly Reduced IT and Developer Workloads
Legacy digital banking systems had immense IT and developer requirements for everything from equipment maintenance to product customization. This adds to the length and cost of the product development cycle and is a major barrier for banks that want to expand into new markets.
Current generation platforms are designed to be much less dependent on in-house IT and software development teams. Human-centric user interfaces make it easy for end-users to navigate and use. A selection of predefined customizations could also be made immediately available to both clients and bank employees without the need for complex and potentially buggy back-end customization.
What all this means is that the employees can focus less on repetitive tasks and more on creating value-adding apps and implementing intersystem automation. This also effectively brings down the cost of delivering bespoke banking services to a range of different client types.
2.) Faster Product Development
Historically, financial product development was a risky and often slow process. Product developers would have to consider several different factors, many of which were also volatile. Collaborating between different teams was also more difficult, as was consolidating, managing, and using data from various sources. Prototyping and testing were also similarly complex, if not impossible.
All of these issues have been addressed in current universal banking solutions. Advances in artificial intelligence (AI), machine learning (ML), and data management technology have made it possible to bring financial products to market in days or weeks, if needed, rather than the months or years that it would normally take.
In particular, the added collaborative features of cloud-based systems make it easier for a bank’s teams to work together and share data when developing products. The AI and ML modeling capabilities of new systems also allow development teams to quickly simulate different scenarios with high accuracy, further bringing down the risk and cost of development.
With faster and less-risky product development, banks can now easily transition to new business models and markets, coming much closer to the ideal of a “universal bank”.
3.) Simpler, More Comprehensive Customization
These days, it’s no longer enough to provide products that work for most people within a given market. As many banks are now finding out, customized financial products are key to delivering elevated client experiences. Being able to offer white glove service to all clients is now something banks want to achieve. This is because better experiences result in better retention, which reduces the need to spend heavily on new client acquisition.
Most legacy systems make customization challenging, even for bank employees. Almost all customizations would have to be executed with the help of the client service team and possibly finance IT personnel. This meant that high levels of customization were usually only practical with specific key accounts.
This is no longer the case with current universal banking solutions. Not only can most bank employees create customized offers more easily, clients can also use mobile or web applications to make some changes to their accounts themselves. If clients or internal teams need assistance, advanced AI chatbots could be used to address most queries, further reducing the cost of delivering bespoke financial services.
Drive Profits and Reduce Labor Inputs through Better Universal Banking
While they may have been groundbreaking, legacy core banking systems have come up against several practical efficiency limits. The large demands they place on IT teams and end-users contribute to reduced service levels and more time spent doing busy work rather than tasks that add value to the business. Additionally, they cannot natively support as much useful automation as current systems.
Newer banking platforms leverage decades of research in artificial intelligence and machine learning to remove almost all the obstacles present in legacy systems. These new capabilities allow banks to reduce the time and monetary costs attached to virtually every banking process. Advanced cloud solutions such as Oracle’s FLEXCUBE add to these formidable capabilities by allowing banks to localize the system for multiple geographic regions, allowing these financial institutions, in turn, to better focus on growth and client satisfaction.
If your bank is poised to acquire a new core banking solution, it will be important to choose technologies that can bring you closer to your cost-efficiency goals. To get the most out of your investment, make sure your vendor can provide you with the training and support you need through the lifetime of your system.
