The Record - Issue 20: Spring 2021

94 www. t e c h n o l o g y r e c o r d . c om V I EWPO I NT “Adopting a cloud and platform- based approach opens up a range of exciting opportunities for banks” T he battle for traditional banks’ customer relationships has intensified in the last few years, with digital-first start-ups gain- ing market share and maturity. Big technology companies are also nibbling away at the edges of some areas of banking business, including small business lending and consumer credit. Recognising that often non-interoperable leg- acy IT systems get in the way of innovation and create inefficient processes, many banks have responded to market conditions by accelerating the transition of their operations to the cloud. As a result, they have unshackled their oper- ating models from outdated technology and opened opportunities to deliver more relevant customer experiences, while reducing total cost of ownership, and without increasing risks associated with managing security and IT infrastructure. This transition to the cloud has driven the rise and adoption of banking platforms as well as the use of open application programming inter- faces (APIs), which serve to enable collaboration between banks and other third parties, such as information providers and fintechs. Instead of trying to build every new process from the ground up, banks can partner with providers of services that improve back office processes such as credit checking or anti-money laundering (AML). This in turn helps to improve services provided to customers, who can poten- tially get a loan or credit card decision in minutes rather than days. The knock-on effects include a faster time to profit for the bank, greater cus- tomer loyalty, and lower customer churn. It is no longer a question of whether banks take new strides towards a strategy for how to keep pace with technology innovation, but when. Competition will only continue to increase in the decade ahead, driven by ever more powerful, smart technologies available to all players in the financial services sector. Banks that fail to take action run the risk of being overtaken and left behind in the race to win new customers. The good news is that there are now a number of ways to move for- ward smoothly with programmes of digital transformation. One of these is to tap into an internal platform that can facilitate innovation by exposing core infrastructure via APIs to fintechs and devel- opers, with banks selecting the most relevant to provide products and services for customers. With this approach, banks can access and lev- erage external expertise to launch the new ser- vices that customers want to see, or the processes that improve the customer experience overall. However, building a proprietary platform is made more complex by the need to ensure inte- gration and interoperability with existing legacy systems, while also creating a more flexible and Platforms such as Finastra’s enable banks to pursue digital transformation while reducing costs and delivering great customer experiences E L I ROSNE R : F I NA S T RA The banking benefit of a platform approach