How to Tell When Your Incumbent Digital Banking Platform Is No Longer Cutting It

future of banking technology

Technology changes rapidly, and banking technology is no exception. At some point in the course of every technological evolution, businesses that rely on a specific set of technologies have to judge when they have reached the tipping point from “good enough” to “not good enough anymore.” For the digital platforms used by most financial institutions, that moment may be now.

It’s Time to Think Outside the “Bank In a Box”

In the infancy of digital banking, a thriving industry sprang up to serve institutions that lacked the resources to develop their own in-house banking technology. Providing “bank in a box” products for the various functions — loans, mortgages, checking accounts, secure websites and so on — that customers expected from a modern financial institution, these vendors made it possible for smaller banks and credit unions to compete.

On the whole, this a la carte approach served its market well for a couple of decades. The problem is that newer, more-agile competitors have arrived in the form of fintechs and other tech-based, non-traditional players with fast, modern, fully integrated digital platforms. The future of banking has arrived, and it’s time to take a hard look at how well you’re prepared to meet it.

Software Has a Life Cycle

The simple truth is that the software industry moves quickly, and vendors who can’t keep up are quickly relegated to the dustbin of history. 

In the 1980s, text-based programs like Wordperfect and Lotus 1-2-3 dominated the market. Those companies were blindsided by the shift to Windows and Macintosh with their graphical interfaces. Early internet titans like AOL and Yahoo became also-rans as newer companies created the interactive, media-rich “Internet 2.0.” In each case, the newer technology improved convenience, ease of use and customer engagement. Vendors and the banking industry now face a similar adapt-or-die transition to the mobile-first environment. 

Along the way, the companies that relied on these vendors were faced with the choice of clinging to ever-more-dated software (which, in turn, required increasingly “niche” skills that were harder to hire and train for) or simply moving to a newer, up-to-date platform. Recognizing when that time has arrived, so you can plan a transition on your own terms, is a critical business skill. 

Signs It’s Time to Move On

Every vendor relationship is unique, but there are a number of well-established signs that your partnership has run its course. Some may indicate an erosion in your relationship, or an unwillingness — or inability — on your vendor’s part to help it evolve. Others, more troublingly, point to a vendor which itself may be in deep trouble

  1. Vendors are Cagey About Their Roadmap: Your vendors know that the market is trending toward greater integration, better data analytics and mobile-first apps. If their discussion of the future is long on promises but short on specific dates and milestones, it may be time to change.
  2. Vendors Offer Non-Product Responses to Product Questions: If a vendor responds to your questions about a product’s future by offering a price reduction or an upgrade to a “premium” support or service package, that’s a distraction technique and should also raise questions. The tech industry’s unflattering term for software that will arrive “someday” is vaporware, and you can’t run a business on it. 
  3. Vendors are Unwilling to Collaborate: If your existing suppliers are ever going to meet the increasing need for full integration between functions, they’ll have to be willing to work together, or at least actively support your own IT team’s integration efforts. If they aren’t willing to do that, it’s fair to question whether they’re really supporting your interests. A vendor that’s not part of the solution is part of the problem.
  4. Vendors Look Vulnerable: The business health of your vendors has a direct impact on the health of your own business, so you should actively monitor it. If your vendor reports poor financial results, if new sales are dropping and current clients are leaving, and especially if sites like Glassdoor reveal high turnover and low morale, your vendor is in serious straits and it’s time to question how long they’ll remain able to meet your needs. 

Breaking Up is (Sometimes) Hard to Do

Your IT structure is the very backbone of a financial institution, and it’s perfectly reasonable to be wary of the cost and disruption that a change of platform represents. There’s also the question of how your outgoing vendors will respond: Will they be professionals and support your product to the very end, or will they leave you orphaned as you enter your transitional period? 

That’s a legitimate concern, although it can be strongly argued that the latter are not companies you should trust with your business. 

The most-proactive approach to these concerns is simply to choose a new partner with a demonstrated capacity to smoothly transition institutions like yours to a new platform. Welding together the data and functionality represented by a handful of disparate software systems is far from a trivial task, and any potential new vendor should be able to provide you with numerous testimonials from clients who have been through the transition process with them.

Cutting-Edge Banking Technology

Traditional banks and credit unions are facing the proverbial “death by a thousand cuts” as tech-first providers erode traditionally bank-based services: Venmo and Zelle for exchanging money between friends; Apple Pay and Google Pay at the cash register; Robinhood in DIY investing; and SoFi for full-spectrum banking are just the best-known handful. 

Lumin Digital provides exactly that kind of platform: a fast, modern, fully integrated, cloud-native app that’s capable of taking your institution from laggard to leader in a matter of months. We can collaborate with your existing vendors and services to customize the experience. The intuitive app and consistent interface among devices make it easy for your users to adapt, and back-office administrative functions are just as easy and intuitive. You’ll be able to unlock the potential of the data you already own to provide deeply personalized service and recommendations that will preserve your people-first branding as you transition to the next phase of banking technology. 

Contact us today to request a demonstration and learn how Lumin Digital can bring the future to your institution, here and now. 

References:

  1. CIO.com: Technology Health Check – 10 Early-Warning Signs of a Failing Vendor or Product
  2. McKinsey & Company: Analytics in Banking: Time to Realize the Value