Consumer demands are ever-changing and firms must ensure they are keeping track these preferences in order to retain loyalty and achieve long-term success. However, a report from Endava, the tech company with a focus on engineering and industry expertise, has revealed that one of the biggest hurdles preventing change is legacy tech.
The Endava Retail Banking Report shows that 75 per cent of firms are struggling with new payments systems as a result of their outdated core systems. Additionally, challenges are also arising from implementing updated cybersecurity measures. Firms are trying to keep up with digital demands by turning to the cloud. However, they have expressed concerns about implementing, scaling and managing the tech.
Nonetheless, 75 per cent of businesses believe they offer a good user experience, have strong data management practices and better technology than competitors.
When analysing challenges that are stopping cloud adoption, the report found the top barriers to implementing a cloud-based core are:
- competing technical priorities (40 per cent)
- a lack of technical resources to manage it (37 per cent)
- a fear of a long implementation (32 per cent)
- fraud/security concerns (29 per cent)
Features must be built on new systems to stay ahead of competition
Fred Fuller, global head of banking at Endava, commented: “FIs have come a long way in embracing the fact that modern banking and a cloud-based core go hand-in-hand. Banks also recognise that migrating a legacy monolithic core to the cloud is not modernisation. They need to leverage modern digital technology to truly modernise the core to create a flexible and dynamic infrastructure that can quickly respond to customer and market demands.
“Although FIs think their technology is stronger than their competitors, the reality is that new features and functionality are usually built on old systems, which massively limits their scope for innovation.
“Working with technology partners who can implement and manage a new core will help them embrace customer-centric banking. This means being able to quickly roll out new products and services, as well as streamlining and securing their internal processes – all of which will help them hold onto market share.”
Looking to the future
FIs continue to face rising interest rates and inflation, and the report also taps into economic drivers such as creating a more profitable and loyal customer base. FIs ranked high-priority ambitions for the next year as increasing efficiency (85 per cent) and retaining customers (83 per cent). Following this was improving the digital customer experience (85 per cent) and maintaining system stability (83 per cent). Lastly, strengthening security/reducing fraud (83 per cent).
To meet these goals, many are turning to new technologies to improve internal processes and customer-facing products.
While most are in the early stages of adoption, half of the FIs see AI as a top area for investment. This is closely followed by data analytics (45 per cent). Both of which can offer powerful real-time fraud detection, virtual assistants, security, and investment management. When it comes to their existing tech, upgrading open banking (81 per cent) and payment gateways (81 per cent) are high or very high priorities. These focus areas will help them tackle ongoing challenges by becoming more customer-driven and tapping into additional revenue.
Francis Bignell
