The Financial Brand’s Jim Marous made some strong points in an article titled, Becoming a ‘Digital Bank’ More Than Lipstick on a Legacy Pig. However, more emphasis should be placed on the urgency of the situation.
Any banker who read Marous’ article and thought, “He’s right, I need to make some changes,” already may be late to the party. The GAFAs (Google, Amazon, Facebook, Apple) of the world have launched their assaults on the financial services industry; banks and credit unions need to respond now.
Most financial institutions know they’re not where they need to be from a technical standpoint. The question for them is, how do they get from here to there as quickly and efficiently as possible while maintaining a healthy income stream?
Two critical areas bankers need to consider when mapping their digital transformation strategies are core data processing and digital partnerships.
Core processing platforms that were designed 10, 20 or even 30 years ago were built pre-Internet. They’re not able to keep up with what is required in 2018, much less the future.
On the other hand, any financial institution that starts a core search today probably won’t have that new system deployed for another two or more years. And what will they choose? Another legacy system that, as Marous puts it, just adds some lipstick to an old pig?
What the banking industry truly needs is a modern, digital-first core that can handle today’s marketplace and be deployed quickly compared to legacy cores.
There are other options, too.
Banking-as-a-Service: A new business model
As an alternative to going through a full conversion, today’s financial institutions are exploring new digital partnerships that can help accelerate transformation and, in some cases, at a fraction of the cost.
A growing trend is to launch a standalone digital bank brand to accelerate customer on-boarding and better compete with newer fintech entrants. Rather than trying to re-design the mess of legacy infrastructures, with the right partner, financial institutions can pursue this strategy at the speed today’s industry requires.
NYMBUS SmartLaunch™ was recently introduced to the market with this very concept in mind. Its Banking-as-a-Service (BaaS) model outsources the entire operation of a bank’s digital brand—from a customer-facing call center to back-office operations to targeted digital marketing and website services—to the company’s team of industry banking experts. SmartLaunch is also built on NYMBUS’ modern, digital-first SmartCore® platform, which eliminates the need to undergo a conversion. The legacy operation isn’t disrupted and there’s minimum disruption to existing staff.
Is digital transformation imperative? Absolutely. Nobody is arguing that. However, the word transformation often implies time, cost and risk. New banking models and technology partnerships are changing that for today’s financial institutions. They need to look at these digital opportunities, and they need to do it now.
Contact us to learn how we can help you stand up a new digital brand in as few as 90 days with no core conversion or additional staff required.