Digital transformation in banking integrates all areas of the financial institution from back office and infrastructure to customer-facing services. Properly executed a well-planned digital transformation allows for advanced analytics that can improve customer service and support, reduction of costs, improving efficiencies, and upgrading security. In today’s world of tech-savvy customers who expect an exceptional digital experience, every community bank and credit union is faced with the same expectations when it comes to delivering digital banking regardless of location, size and scale.
Given these tremendous expectations where should banks – especially smaller banks with limited resources – start when thinking about digital transformation?
There are many ways to approach a bank digital transformation strategy. Your financial institution’s core banking software is the heart and center of the digital banking experience. Let’s talk about the three best options that a community bank or credit union should consider when tackling its digital transformation.
Legacy core banking systems have been traditionally successful from a reliability standard. These 20+-year-old systems were not designed for the open architecture requirements we see today. Some financial institutions must endure day-to-day pain points with these legacy core banking systems. These problems can range from the various vendor–support issues, lack of engineering talent, and a complex code base that makes it challenging and expensive to make changes.
In these cases, replacing your core could be the best approach. By fully implementing a digital back end, your financial institution will have the architecture to support itself for years to come.
It is a huge decision to replace your core even with the nuance of the dramatic digital transformation trend that is going on in banking. Your institution might not be ready to migrate to a new core system right now. There could be major core systems that need digitization faster than others. For example, your institution may wish to replace its consumer banking system functions, while leaving the commercial banking side of the house alone.
Or, you could have a high abandon rate on your institution’s digital account opening process that’s impacting your ability to meet goals. It might cost as much money to build improvements as it does to get it replaced. Additionally, your institution would need the resources to handle such a project that will take them away from other important work.
An institution’s digital transformation strategy might involve identifying the components that need the change the most and focusing on them. Core as service providers like BrightFi can integrate or run its software solutions alongside your institution’s core systems. This prevents a full rip-and-replace while enabling you to pick and choose the areas that get can get digitized. Your other existing systems remain in place and the areas that need the most digital transformation can get the needed upgrades.
Your institution’s banking core might meet your current needs which could make it hard to justify replacing or unbundling it. Trends in banking over the last decade have created a very different landscape. Community banks and credit unions have expanded outside their footprint to offer a brand new, completely digital banking service.
Other institutions have launched new digital banking products to stand side by side with existing offerings. This offers a cost-effective and fast way to tap into what a digital transformation could look like. It also offers a way to fill potential holes that exist in your current portfolio or get into a new target market by offering a Crypto Wallet, for example.
Regardless of whether your institution launches a new digital bank or product, this option gives the ability to implement a new platform that takes weeks, not months to launch. Evaluating the results from launching a new offering that sits alongside your core can help form a more informed, strategic approach to your institution’s overall digital strategy.
Whatever approach you chose, BrightFi has the technology and the technical support to meet you where you’re at and support your digital transformation needs. If you’re interested in a no-obligation conversation to talk through options or discuss where you are at on your digitization journey please contact us.