Technology continues to have a significant impact on financial institutions (FIs). In fact, recent Accenture research revealed that 85 percent of global bankers believe the pace of change in technology will only increase over the next three years.
The survey found that 55 percent of jobs at FIs have a digital component, and this figure is expected to rise to 61 percent by 2019. Nevertheless, banks face a number of challenges when trying to stay ahead of the digital revolution.
Let’s explore some of the biggest IT hurdles that FIs encounter in their efforts to develop innovative banking services for today’s crop of tech-savvy consumers.
Many established banks use IT systems and applications that were built up within their organizations gradually over the decades, often in a piecemeal fashion. For example, some transaction processing technologies still in operation were originally implemented in the 1990s.
The speed and reliability of these platforms is therefore an ongoing issue, with many reaching end of life or costing FIs considerable amounts of money to support and maintain.
One of the key challenges is that upgrading technology while maintaining business as usual is often difficult, particularly for highly visible systems such as transaction processing.
Poor channel integration
When running legacy systems, compatibility and integration with both new and existing technologies is likely to be limited. This problem is exacerbated for organizations that operate in silos, causing problems in both back- and front-end functions.
Banks with poor channel integration are unlikely to provide a seamless consumer experience across their services, which can create frustration and delays for customers and staff.
Accenture figures show that 20 percent of people are already digital-only consumers, preferring to perform tasks online. This is especially true among those aged between 18 and 34, although the report noted that older individuals are also very open to experimenting with digital channels.
Lack of technology skills
FIs need more than just the latest technology if they want to maximize their IT investment; they must have people with the right skills and experience to leverage the functionality of new platforms.
Research shows that banks are struggling to source people with technology skills. PwC revealed in 2015 that only five percent of financial services firms felt they could secure the talent they needed, and 72 percent listed the availability of key skills as a top threat in the firm’s 2016 CEO survey.
“The key challenge financial services chief executives globally are faced with is how to attract, train and retrain people who, for example, combine digital and industry-specific skills – few as yet possess such hybrid capabilities,” said Jon Terry, PwC’s global financial services human resources consulting leader.
Building a better technology approach
Outdated systems, departmental silos and skills shortages are three of the biggest issues preventing banks from gaining maximum value from digital opportunities.
However, FIs that take a proactive approach to upgrading their hardware and software can deliver a personalized omnichannel experience for customers while also creating cost and time efficiencies across their operations.
Failing to act now means many banks may find it difficult to compete once more agile, technology-conscious organizations overtake them.