IBS Journal July 2016
EDITOR’S NOTE APPETITE FOR INNOVATION
IT’S NOT JUST BANKS, WEIGHED DOWN BY CREAKING LEGACY IT SYSTEMS, THAT ARE UNDER THREAT FROM NIMBLE STARTUPS; MANY ESTABLISHED TECH VENDORS MAY ALSO BE FACING AN UNCERTAIN FUTURE.
05
Senior Editor Scott Thompson
2019, 25% of retail banks will use startup providers to replace legacy online and mobile banking systems. My initial reaction to that bombshell was, 25%? That must be a typo. They meant 3019, right? Sweeping statements equal lots of media coverage (and Gartner certainly hit the jackpot here) but they are not particularly helpful in the grand scheme of things.
G
The argument goes that incumbent vendors often do not support open architectures that decouple the presentation of services from the services and transactions themselves and, crucially, enable banks to bring new and existing processes together to offer innovative digital services. New vendors have emerged, enabling banks to offer apps and applications that support personalised, customer- centric banking experiences, data and behavioural analysis, location and context sensitivity and creation of a partnership ecosystem to create new services leveraging partner data, transactions and processes.
But as Simon Barrows, Founder and Director of Archioptiryx, counters: “The retail banking landscape is in practice made up of a heterogeneous mix of players of various shapes and sizes, with widely differing customer bases, strategies, and digital capabilities. One size certainly doesn’t fit all. Smaller entities, who perhaps have limited digital capabilities and by their nature small customer bases, will be ideal candidates to seek a transformational “leg up” through working with specialist digital solution providers. The major banks, however, who have been
Scott.Thompson@
ibsintelligence.com
artner has predicted that, by the end of
spending hundreds of millions on developing their own digital capabilities, will not typically be looking for complete replacement solutions due to scale of the risk, migration, back-end integration etc, but instead can be seen working collaboratively with FinTech and other solution providers to augment their own capabilities particularly in niche areas and targeted propositions.”
Professor Merlin Stone, a customer management expert, observes: “I am not sure about the percentage, but I am sure that the vested interest of the combination of legacy providers and large management consultancies, some of whom prefer to sell thousands of days patching up old systems, will eventually be challenged, whether by startup providers working directly, or else with challenger institutions. But it will take a long time.”
It will indeed. Choosing an emerging vendor is always a potentially dangerous place for any CIO to be, especially in the risk-averse world of banking and for customer- facing applications. To be innovative, though, invariably carries a degree of risk, and there is a genuine appetite for innovation within many big retail banks and also the challengers looking to take them on. As Simon Barrows puts it: “Quite often the business case for innovation is speculative at best; a gamble. But the potential benefits may be significant, as might the implications of doing nothing.”
The game isn’t up for incumbent vendors, but it is changing, slowly but surely.
www.ibsintelligence.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
