Not only is banking undergoing a digital transformation but a branch alteration as well. Some financial institutions are even doing away with the traditional lobby in favor of open-floor concept, incorporating best-of-breed technology using application programming interfaces (APIs). 

“A digital banking platform (DBP) enables a bank to begin the transformational process of becoming a truly digital bank that is ecosystem-centric,” proposes Gartner Peer Insights. Because so much today takes place via digital self-service, when consumers come into the branch, they are often looking for personal, high-touch service or support. 

The traditional teller role is evolving to become less transactional and more advisory oriented. This could involve helping with a loan application or advice centering around managing finances. Branch technologies will play a vital role in evolving the role of the “new-age” teller because the front of house still needs access to technologies such as cash recyclers, banker-use tablets that enable transactions to occur anywhere in the branch, and customer-access devices used while consumers wait for help. 

Branch automation systems involving best-of-breed technology such as accounting systems and messaging platforms connected via APIs also needs to tightly integrate with the core accounting and other critical systems. If the integration is not seamless, the branch transformation will not work as effectively.

Transforming Legacy Systems 

While digital transformation might intimidate many financial institutions the reality is many must implement new tech strategies to stay relevant. At the Tearsheet’s The Big Bank Theory Conference, banks, credit unions, challenger banks, and payment firms tied a bow on 2022 and gazed into the banking technology crystal ball for 2023.

The Tearsheet conference participants found many financial institutions continued to innovate despite the turbulences of the last few years. Not only did Gen Z and millennials demonstrate a receptiveness to digital banking, but older accountholders learned to bank remotely as well. 

Now all traditional banking institutions have to compete with a leap of transformation driven by new fintechs and ground-breaking technology in the financial services industry. In addition, technologies that continued in silos for years have to adapt to interfaces that deliver unified end-to-end customer experiences. 

The Tearsheet conference reviewed some tech strategies that work:

  • Simpler is better: Adapt current and legacy infrastructures and processes to new products, demands and regulations. 
  • Align teams to products: Chase has 100 different product teams. “Organizations with this level of sprawl in revenue streams can be particularly hard to digitally ‘transform.’” Focus on modularization, untying frameworks to APIs, and constructing a process that permits product teams to test features a great deal and autonomously.
  • Experimentation: When organizations develop with agility, products roll out quickly, and so do solutions to any problems, noted Tearsheet. Independent research and protracted testing could enable this process. 
  • Blending high tech and high touch: Chatbots are routine nowadays, and even making headlines. But in reality, digitizing an agent’s work has proven difficult. Bank of America’s answer to this problem is ERICA, a chatbot that serves over a billion responses.

APIs and Automation

According to global research firm Omdia’s IT Enterprise Insights (ITEI) Survey 2022/23, digested by Information Week, seven in 10 IT decision-makers in retail banking plan to increase spending in 2023. Omdia suggested they must prioritize to achieve business continuity around modernization of core banking to move the industry forward with open APIs; automate processes to transform both customer and staff experience; and actively engage with IT sustainability means to their organization. 

This involves a move to the cloud and composable banking — financial services that treat change as a constant — to manage front- and back-office development to enable digital transformation more effectively. Additional steps include developing core banking around real-time, API-first, and cloud-native solutions that can bring flexibility and scalability benefits.

Investment should also produce a high level of automation and use of analytics. Personalized (23%) and consistent cross-channel (22%) customer experience and a comprehensive view of the customer across business lines (20%) are the top IT projects for omnichannel banking strategy, according to Omdia’s survey. Financial institutions are also prioritizing interaction with contact centers on chat and via chatbots, which allows a large proportion of queries to be resolved easily, thus decreasing the cost of customer attention. 

Bankers also need a definitive grip of where technology and automation provide a clearcut advantage to their strategy (from digital channels to contact centers and branches) and where human employees are the most effective direction to serving the approach and developing processes and services.

Tech sustainability achieves importance through definitive approaches by financial institutions. While some financial institutions are making “significant progress,” others report difficulty in maintaining compliance with existing rules, and understanding the technologies having the chief progressive effect and benefits. Suppliers and partners that do not share sustainability goals are also a challenge for financial institutions.

Financial Institutions Trend Toward Fintech and APIs 

For financial institutions achieving optimum branch automation and digital transformation centers around a form of “co-opetition” — collaborating with would-be fintech competitors to change the banking tech ecosystem. 

Credit unions, and community and regional banks need fintech partners because many lack their own technological staff and resources. Besides, many financial institutions recognize their customers are familiar with and already using innovative tools that deliver better digital experiences. So, many financial institutions ask, “How do we incorporate them?” using branch automation.

These financial institutions must decide how to better engage their accountholders, whether through a partnership acquisition, a simple agreement, internal development or accessed through the cloud. It is a matter of how these financial institutions get on board with these fintechs now. 

Because with regulations governing open banking pending, everyone will compete for resources, talent, and for an understanding with partnerships, along with everybody else. Doing nothing is really just not a strategy anymore. The deer in the headlights look is not the correct response. 

NXTsoft offers secure paths for financial institutions to free up and connect with fintechs. OmniData enables financial institutions to access its data quickly and securely; and OmniConnect, the vendor agnostic premier open banking marketplace for all API needs, provides API connectors for as many different core accounting and branch automation systems.