By Puja Agrawal, COO, Americas at Finastra

The dramatic adoption of digital banking throughout the COVID-19 crisis promises to be a trend not soon forgotten as consumers and corporates race toward a substantially more digital future.

Fortunately, financial institutions met the challenge for digital service throughout the pandemic. J.D. Power’s customer satisfaction survey indicated a gain in positive consumer sentiment for digital only consumers during the 2020 time-period.[i] Businesses also felt the same way, praising financial institutions as they met the record-breaking demand for PPP and EIDL loans.

Now, as banks and credit unions catch their breath from pace of change required in the beginning of the pandemic, the general advice is don’t exhale for too long. The next wave of consumer and business preferences is here, and it involves greater, smarter personalization, and the need for increasing levels of digitization.

If financial institutions are going to continue to satisfy customers, whose digital expectations are higher now than ever before, they cannot become complacent when it comes to digital innovation.

Winning the Future Digital Race

If there were one keyword that will set the tone for rule consumer banking over the next decade, it would be personalization. Thirty-seven percent of consumers want their bank to be more like Amazon, delivering relevant automated feedback as they search for new products, such as a mortgage, or open new accounts.[ii] An additional twenty-nine percent want their bank to act as a personal shopper, guiding them directly to the products they need, while sixteen percent know what they want and fully expect their bank to have it.[iii]

Businesses are exhibiting many of the same preferences. In our recent survey of corporate banks, we asked executives to rate their clients’ priorities now, and we also asked them to indicate what they expect those priorities to be in 2025.

In both cases, online banking portals remained in the number one position, with range of products and services occupying the number two slot.[iv] Account relationship management fell to third,[v] indicating that corporates want account relationship managers to provide digital offerings that support swift and efficient financial management.

To succeed in the new environment, financial institutions will need rapid access to a more extensive array of products, services and capabilities.  However, this isn’t a distant vision in an undefined future. It’s a reality that is happening right now, placing financial institutions in an all-out sprint towards a new era of banking.

For most, rapid transformation will come through a platform-based ecosystem, as developing new products is seldom a short journey.

Platformification in Banking, Speed and Agility Realized

According to market analysis conducted by EY, the banking environment is changing at such a rapid pace that financial institutions can no longer succeed by developing and managing the vast number of “best-of-breed products, services, capabilities and personalized experiences” that consumer and corporate customers are and will continue to demand.[vi] EY even goes so far as to wonder why banks and credit unions would try to do so, when platform services are simpler and faster to adopt.

Bank executives seem to agree. That’s why sixty percent of those surveyed by McKinsey said they are likely to form or join an ecosystem,[vii]  becoming platform players.

Adopting a platform business model supports digital adoption, often through cloud-based services.  While financial institutions can build their own platforms, time and resources are against them to embark on such multi-year journey.  Even the best of the software enterprises spends years building and maturing platforms that meet the broad set of requirements for customers.  Partnering with an existing provider, without doubt, is the quickest and most direct route to meeting the demands of digitally-focused consumers and businesses. Instead of becoming platform builders, financial institutions can access products from existing platforms through a connection layer of Application Programming Interfaces (APIs).

Using cloud-based platforms, financial institutions consume products as a service, connecting to a host of third-party applications. New capabilities are brought to life in short order; and a new service can be rolled out in days or weeks instead of the months or years required to develop proprietary offerings.

One of the major advantages to the platform model is how it suits the way consumers and corporates bank today. Platforms make it possible for financial institutions to connect consumers to banking services and financial management tools through a single banking portal. Users can even move from personal to business accounts all with the same login.

As customer needs continue to rapidly evolve, platform players are providing the types of services needed now. Financial institutions are able to access “just in time” delivery and maintain their focus on building loyal relationships that will last into the future, no matter what surprises that future may bring.  In the world we live in today, “slow and steady” no longer wins the race; financial institutions need to become “fast and furious.”

[i] “U.S. Retail Banks Nail Transition to Digital During Pandemic, J.D. Power Finds.” J.D. Power. J.D. Power Press Release, Apr. 27, 2021. Web.

[ii] Sonia Brodski, et al. “What Does Personalization in Banking Really Mean?” BCG, Mar. 12, 2019. Web.

[iii] Sonia Brodski, et al. “What Does Personalization in Banking Really Mean?” BCG, Mar. 12, 2019. Web.

[iv] “Roadmap to the New Relationship Model.” Finastra. Retrieved from https://www.finastra.com/sites/default/files/2021-03/market-insights_roadmap-new-relationship-model-transitioning-from-traditional-relationship-management-world-lending.pdf.

[v] “Roadmap to the New Relationship Model.” Finastra. Retrieved from https://www.finastra.com/sites/default/files/2021-03/market-insights_roadmap-new-relationship-model-transitioning-from-traditional-relationship-management-world-lending.pdf.

[vi] Howard Moseson, et al. “How Banks Are Using Ecosystems to Drive Growth and Profits.” EY. EY Parthenon, Dec. 4, 2020. Web.

[vii] “Ecosystem 2.0: climbing to the Next Level. McKinsey Digital. McKinsey Quarterly, Sept. 11, 2020. Web.

Puja Agrawal_Bio

Puja Agrawal is the Chief Operating Officer of Americas at Finastra and a board director with decades of experience driving hyper growth in start-ups and public companies.  As Chief Operating Officer of Americas at Finastra, the third largest Fintech in the world, Puja’s responsibilities include driving growth and transformation, partner ecosystem, go-to-market, and customer success. Puja also serves on the board of directors for Quantifind, and as board advisor to Hummingbird RegTech.

Puja has been a pioneer in introducing disruptive solutions to the market for financial services, her strategic experience spans across small to largest global financial institutions.  Prior to Finastra, Puja was Global VP & General Manager of the Financial Markets Compliance business within Nice Actimize.  As the CEO of the business, she led the global business with full P&L accountability, and was responsible for the vision, strategy, global operations, and all functions of the business.

Puja is passionate about enabling financial inclusion in the world, mentoring start-ups, and promoting diversity and inclusion in the workplace.