Digitize all the way with agile fintech players

This is an excerpt from Finextra’s report, “The Future of Digital Banking in the UK 2022”.

Beyond the recent Covid-19 pandemic, the world has found itself operating in an environment plagued by unpredictability, with climate change and global geopolitical events marking only the tip of the iceberg. In addition to these pressures, the financial services industry must also manage a highly digital customer base and an increasingly interconnected global money transfer system.

While the recent availability of data is unprecedented, enabling personalized and often instantaneous delivery of financial services designed specifically for the end user, it comes with risks.

The potential for widespread outages, data breaches, and greater exposure to nefarious actors means that financial institutions need to reassess and evolve their infrastructure to mitigate these threats. Digitizing all the way with the support of agile players, such as fintechs, can enhance this agility.

The Lloyds spokesperson observes that as customer, technology and competitive trends change faster than ever, banks need to be forward-looking: “Scanning the horizon and Improving our understanding of emerging spaces through experimentation is essential to success. Additionally, the banks are focused on helping shape the future direction of the industry by applying its areas of expertise to emerging opportunities and challenges.

“Recognizing the innovative activities taking place across a range of organizations and industries, we are increasingly integrating into our decision-making whether the right answer is to build something in-house or partner with third parties, such as than fintechs. By collaborating in this way, we can better navigate a changing and uncertain environment; support our efforts to provide the best products and services to our customers.

A good example of where Lloyds has achieved this goal is its partnership with Minna. Using Minna’s capability, Lloyds was able to launch the industry’s first in-app subscription management service. “Minna built and we integrated, allowing customers to block and cancel recurring card payments, helping 1.2 million customers manage their subscriptions so far.”

Alexander Richards, Head of Corporate Strategy, OakNorth explains that listening to what customers and data are telling you is key to managing unstable times.

“In times of unpredictability, or when exploring new offerings, people often first look at what they have done before – whether personally, institutionally or industry-wide. This creates a historical bias that is hard to overcome, but can be overcome with the help of ambitious, data-centric fintech players, as well as investing in understanding what your customers are going through.

Richards adds that there needs to be a strong partnership here, as both parties need to learn from each other and the customer data and insights they bring to the table. It is at this intersection that true digitization to the core can be achieved.

Mel Meshkat of first direct observes that in the face of the unpredictable, being attached to specific ideas can prevent you from listening to customers or tackling challenges with agility. “Focusing on creating positive behavior change is crucial for this.”

She adds that while effective partners can help drive this evolution, there is no avoiding the reality that digitization to the core has been a challenge for banks that predate the internet. Therefore, “embedding the right foundations and enablers is necessary to generate true agility and truly unleash the power of fintech partnerships.”

How to Leverage Infrastructure to Make the Most of Partnerships

Ensuring the right infrastructure is leveraged is a key part of building resilience through stronger and more productive partnerships.

Meshkat argues that agility and adaptability are priorities going forward, and that in a world of connectivity, using the right technology with the right infrastructure is essential to support solutions and deliver the best experience. to customers.

“Scalability, speed, accessibility and inclusiveness are all important to us. In order to enrich customer data, we use cloud-based solutions that enable faster processing and faster time to market. The cloud also gives us greater flexibility to integrate at the pace of our partners and suppliers. »

For Lloyds, being fit for purpose means the infrastructure must enable the bank to respond more quickly to the needs of its customers.

An infrastructure that is highly secure and able to adapt to the evolving global business environment and regulatory changes is essential, as is the ability to “quickly create new environments in 1-2 days to test and experiment with new products. , functionalities and concepts”.

The Lloyds spokesperson considers that the public cloud plays a fundamental role in providing this flexible infrastructure in the most cost effective way: “The cloud infrastructure will provide resiliency by being distributed across zones and regions and will also enable the portability of services and applications between cloud service providers.”

Richards notes that while most banks are well on their way to moving data management, process management and some analytics to cloud-based systems, a surprising number are still hesitant to make the leap to a basic banking system. completely cloud-based.

“This will not only cripple banks in the short term – given the expense and time of managing non-cloud core banking systems, and the complexity of integrating cloud-based applications with them – but also significantly hampers the “long-term agility. Moving everything, including the core, to the cloud can be a significant competitive advantage,” says Richards.