Banks today are under pressure to perform — to generate revenue, to grow and to ensure regulatory compliance. Central to all of this is the customer. Without loyal customers to invest their money over the long-term, growth and profits aren’t possible.
Increasingly, customers do their banking either online or via mobile app, so it’s up to banks to provide users with a digital experience that meets their needs. How customers interact with their banks through an online component can often mean the difference between staying with a bank or taking their money elsewhere. Unfortunately, however, the technologies that banks are using to produce their digital components aren’t as modern as they should be.
There are several reasons for this. Fiercely competitive design and engineering fields can leave banks struggling to hire the front- and back-end talent they need to build advanced websites and apps. Banks can also have a tendency to get stuck in their ways, prompting a complacent approach to technology and an ignorance of new trends in software framework.
Failure to modernize and appeal to younger generations of customers could eventually kill a lot of banks. Old technologies mean slower loading times, irrelevant features and a fundamental disconnect between what the customer needs and what the bank provides. The key is bringing modern tools into the process, reviewing IT systems and ultimately increasing speed. Modernizing customer-facing digital products can mean:
- Less expensive maintenance. Maintaining an old codebase will, in the long run, be more costly than constantly modernizing it. A product is often built with the latest and greatest software stack, but as time passes, the community for that stack tends to decay as bigger and better stacks make their way into the market. AngularJS, for example, is a new front-end web development framework. Because it’s new and exciting, talent is flooding the market, driving the cost of production down. It will sustain its growth in the coming years, and there will be increasingly more developers who know it.
- A more lightweight digital product. As software stacks have matured, customers have come to expect an unprecedented quality of service. Older frameworks are heavier and require more resources to do exactly what the new ones can do with less. In a business where switching costs are low for the customer, it’s in the service provider’s best interest to provide a product that is quick and easy to use.
- A more user-centered design. Modern technologies allow developers to more easily create apps and websites that are consistent with current user interaction patterns. This promotes products that are more intuitive, accessible and user friendly.
None of these benefits on their own are life changing, but together they add up to a great customer experience. Many banks are starting to catch on to new software trends, going so far as to acquire their own cutting-edge design agencies and bring them in-house. They recognize the need for support from the most innovative designers and developers in the business. But even smaller financial institutions that don’t have the deep pockets of the Big Four can bring their digital tools up to date by teaming with bespoke web and app development consultancies.
It’s time for banks to modernize their digital offerings, or risk obsolescence. A customer-centric approach is the only way forward, and that starts with providing the fast, intelligent tools that users want. Highly beneficial for both banks and customers, digital modernization is one of the soundest investments a financial institution can make.