• CORE BANKING

The activity of banks has changed substantially in the last decade. The way banking institutions (digitally) transform today dictates their future relevance in an increasingly competitive market. The future depends on their ability to keep up with the change, lead it, nimbly introduce new products, and deliver outstanding customer experiences.
At the same time, a dark shadow threatens this future: rigid, monolithic, archaic, and obsolete banking information systems that significantly hold organizations back.

The Ideal Present and Normal Future are Composable

Today, banking activity is carried out in a context of growing complexity. In this sector with centuries of History, many of the institutions, which are centuries old, have remained relevant due to changes in business models and compliance processes with emerging regulations.

But simply changing the business model is no longer enough. Recently, banks have seen their innovation initiatives overtaken by fintech – digitally native startups that set new market standards. The rapid ability to introduce new products, ease of use of services, and interaction with customers via digital channels, among some other factors, have created a new paradigm in the banking industry – one where the ability to change dictates who attracts new customers most effectively.

OMNICHANNEL

  • Mobile
  • Call center
  • Email
  • Wearable
  • Branch
  • Third-party
  • Chatbot
  • Live chat

CONNECTED

  • Open banking
  • APIs
  • Platforms
  • Social media
  • Third parties

CLIENT JOURNEY

  • Seamless
  • Consistent
  • Personalized
  • Real time
  • Rigorous
  • Proactive

LEARNING SYSTEMS

  • AI
  • Machine learning
  • Big data
  • Genio
  • Real-time
core banking software

For most banks, this capacity for rapid change is a threat. The heavy and unmalleable infrastructure (often implemented a long time ago) does not meet the new banking canon. For others, the new reality presents itself as an opportunity to gain a unique competitive advantage.

What “composable” means

The essence of composable is creating businesses made of interchangeable blocks rather than traditional monoliths.

According to Daryl Plummer, Distinguished VP Analyst at Gartner, “a composable business is the natural acceleration of the digital businesses we experience every day. It allows us to deliver the resilience and agility that these interesting times demand.”

Gartner predicts that, by 2023, organizations that adopt a composable approach will be 80% faster in introducing new functionality than competitors.
Suppose organizations are unable to keep up with market needs. In that case, they will be at the mercy of uncontrollable variables by cumbersome, slow systems, and, as a result, they will miss opportunities and fall behind their competitors.

The new reality guided by agility

The new paradigm of the banking sector is essentially dictated by agility, which has gone from being an appealing feature to deliberate to an essential function for long-term survival.

In Quidgest’s view, there are four irreversible variables in the sector:

  • The new expectations of customers, who increasingly demand greater ease of communication and use of services.

  • The entry of Fintech into play, which are the primary drivers of total customer experience change across digital channels.

  • Increasingly tighter regulations with more frequent changes creating a burden on the IT operation of established banks.

  • The introduction of new technologies, which create opportunities for institutions that want to develop new services, make it increasingly easy for new players born out of this new reality to enter.

While incumbent banks lack some of the characteristics of startups in their favor, they have several strengths, such as:

  • Trust of the market, which already knows and recognizes brand value;
  • Proprietary funding methods, which negate the need to resort to outside investment for innovation initiatives;
  • A considerable customer base, which makes launching new products and communicating them more effective;
  • Information and data are already available on customers, which facilitates the design of new products that, through surgical predictive analyses, can anticipate needs.

Therefore, it is a unique opportunity for established banks to adopt the agile modus operandi of startups and attract new demographics, initiate a new and faster process of introducing new products that appeal to the target audience and effectively retain existing customers.

To do so, they need to move away from heavy and costly legacy systems and adopt a composable approach.

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From Monolithic to Composable

Traditional banks are stuck to legacy systems, where any changes are painful processes and often subject to errors. In opposition, Quidgest’s composable approach optimizes agility and speed (testing and implementation along the way). Given that the IT infrastructure must support great flexibility in the new banking reality, it contradicts the stationary reality of monolithic systems.

Rather than having a core system where functionality is locked down, composable reality allows business capabilities to be separated so that they can be combined, switched on and off, and create new products and customer experiences. In this way, banks can continuously deliver new products.

Furthermore, banks will not have to pay for parts of the software they do not use by introducing this new reality. Composability contradicts shelfware by allowing the introduction of only those business functionalities that make sense for the bank.

So instead of banks being left with one software solution that centralizes all functionalities, they are left with an ecosystem of solutions that can be enhanced as needed.

REVOLUTIONIZE THE CUSTOMER EXPERIENCE
  • Fluent and coherent experience
  • Contact channel agnostic
  • Silo-free
  • Customer-centric
  • Personalized
  • Efficient
  • Real-time
COST REDUCTION
  • Automation
  • Focused and personalized marketing
  • Cross-selling
  • Customer retention
  • Process simplification
  • Increased data quality
  • Shorter time to market
  • Decreased maintenance costs
INCREASE PROFITS
  • New clients
  • Customer satisfaction
  • Customer loyalty
  • Cross-selling
  • Focused sales
  • New business models
  • Better conversion rate
  • Shorter time-to-market
  • Competitive advantages

In addition to attracting new customers more effectively and making products and experiences more attractive, the new composable reality allows processes to be optimized, increases profitability, and creates effective management of the bank-client relationship.

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Continuous Evolution

A distinctive factor of all Quidgest’s solutions is their aptitude and readiness to evolve:

  • in response to legislative changes;
  • by the requirement of regulatory authorities;
  • in response to new regulations (cybersecurity and digital privacy regulations are particularly relevant);
  • in response to technological changes (new architectures, languages, versions of supporting software such as browsers, operating systems, and database management systems)
  • following new management guidelines;
  • in response to suggestions from users aimed at improving their productivity and performance;
  • on a continuous and frequent basis (in days, not months);
  • extending or reformulating the scope of the initial solutions;
  • adopting new methodologies and management concepts;
  • interacting with other solutions, from Quidgest or third parties;
  • promoting the info-inclusion of all employees of the entities involved;
  • with controlled and transparent transitions.

Change Management

Although the management team understands the great benefits of introducing a new, more agile system that can immediately respond to changing market needs, we know that these changes assume a slight shift in how all internal stakeholders work.

So that the transition is made effectively, Quidgest develops training actions with professionals at various levels, where they share the gains and how to operate with the new features.

At the heart of all these initiatives will be the gains in productivity and the possibility of positively impacting the organization’s operation. Read more about Quidgest’s approach to systems change in this article.

Do you want to lead the future of banking? Contact us.

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