This is the third part of a 4-part series on the Journey of Automation, exploring emerging automation tools, technology, strategies, and innovation. Previous posts have covered the evolution of automation technology and the importance of having a digital transformation strategy. This post will elaborate on the two concepts, outlining why partnerships with Fintechs now just makes good business sense.
We’ve come a long way from point solutions. Today there are a plethora of end-to-end digital transformation solutions that offer digital front ends that connect straight through to a bank’s core. The Pandemic clearly accelerated the rise of these solutions with Fintechs addressing the needs of banks to digitally transform their business. And it makes good business sense today for Fintechs who no longer need to focus on the mega banks as clients but rather the more voluminous regional and community bank sector. The results: all banks today have affordable options to provide contactless online servicing, easy accessibility of data, more efficient workflows, and more digital revenue products. What was truly surprising to most bank executives is the ease with which modern Fintechs enable end-to-end digitization which is more cost-effective and non-disruptive than the old rigid core providers.
The banks that will remain competitive (and in business) in the future are the ones reimagining their day-to-day operations, incorporating new automation capabilities, and relying on Fintechs to take care of easily standardized processes. Beyond efficiencies, these tools provide a much-improved client experience resulting in revenue going up and account dropouts, well, dropping off.
Old Hesitations
Why now? In the past, technology vendors only targeted the largest financial institutions. But in recent years, community and regional banks are viewed by Fintechs as a viable market. This means that there are plenty of solutions and opportunities available to modernize any size bank.
Less security and loss of data remained major sources of hesitation for many bank executives. Data security is one of the most important factors (if not THE most important factor) in any financial institution. But security threats of the 21st century, however, are marked by rapidly evolving cyberattacks. And compared to traditional banks, Fintechs are much better equipped to handle them. A PWC report found that, unlike traditional institutions, Fintechs are able to quickly adapt their cybersecurity measures to counter new threats in the sector.
The other major concern relates to outdated core back-end technology. The fear was that new automation solutions would require a massive core update (which is complicated, expensive, and has the potential to result in loss of client data). But this is no longer an issue.
New Solutions
There has never been a better time for banks to partner with Fintechs because the concerns of the past are presently resolved. Banks no longer need to invest in multiple point solutions across multiple vendors because many Fintechs offer single end-to-end solutions. Vikar has been the first to offer a truly comprehensive and adaptable solution, able to integrate with bank systems regardless of their core. Vikar’s platform can connect directly to your core back-end, delivering missing modules while maintaining your existing solutions. With an end-to-end solution you can improve your processes, lower headcount, improve productivity, reduce errors, offer digital front ends, and improve the quality of your employees’ work life.
It’s becoming fast apparent that a bank-fintech partnership has a lot more to offer compared to traditional banking services. A major benefit has been faster approvals and account opening. Using Fintech solutions, clients can easily submit account applications online and be efficiently directed to a plethora of other automated customer service options, all of which make banking easier and more personalized for the user. This goes beyond chatbots and virtual assistants—digitization allows banks to operate like a hospitality industry, resulting in higher retention rates. Fintech algorithms also enable banks to unleash insights from data being collected. With this insight, you can better understand the competitive landscape and identify how to best support your organization’s goals while balancing overall risk.
Summary
Digitization and automation are inevitable costs. But they don’t need to be disruptive or damaging in any way. Fintechs are offering banks the opportunity for fast, innovative growth and the capabilities to offer their clients suites of new products and online services. And all while decreasing risk.
So instead of investing in more people, and more vendors, look instead to partner with a Fintech that offers a single end-to-end solution that works for your business.
Nancy Schneier is Chief Revenue Officer for Vikar Technologies. Vikar Technologies offers digital transformation without disruption for Financial Institutions. We are the only Fintech provider with flexible software solutions that enable financial institutions to digitally transform their entire loans and deposits processes without migrating off their current systems.