The effects of COVID-19 combined with big tech invading the banking space has made traditional financial institutions aware that the crux of long-term success depends on their ability to transition to digital banking.

According to Isaac Boltansky, an analyst at Compass Point Research & Trading, “the regulatory moat that has shielded traditional commercial banks is steadily evaporating and the competitive risks are profound,” due to a Federal Deposit Insurance Corp. rule allowing industrial-loan charters that paved the way for non-financial firms to seek banking charters.

A recent Financial Post article said that “The true effect of this rule will be to signal that this charter is a viable back-door option for entering the business of banking without the obligations of consolidated supervision by the Federal Reserve,” a trio of banking and consumer groups said in December. “This rule also cuts against the grain of the long-established separation of banking and commerce.”

What this means is that the competition for financial consumers just got more fierce.

Walmart is seeking to become a one-stop shop for consumer financial needs, and if successful, would instantly have a potential customer base of 150 million and a network of 5,300 branches. Google will soon offer checking accounts to consumers and Amazon is seeking to build a bank for itself, a concept that may be even more threatening to traditional financial institution and a more compelling development than the company launching a deposit-holding bank.

Then in 2020 the effects of COVID-19 put even more pressure on financial institutions to digitize. During the pandemic, open banking fintech needs throughout the U.S. transformed from an upward trend to a surge of digital channels and app use. Millennials, Gen-Xers and even Gen Yers no longer wanted to nor could they drop in on their local bank branch for their financial requirements. They demanded access to banking services not at their financial institutions’ location, but from their digital device, which is usually right next to them.

As banks and credit unions pivot from managing the impact of the pandemic to reopening and repositioning business models to reflect a more digital economy, it is clear many of the changes in consumer behavior will be altered forever. From the way consumers shop for new financial services to the way they transact and interact, we are beginning to understand that consumers are expecting digital experiences to be central to all stages of their customer journey. What is clear is that financial institutions must leverage the power of big data, AI and machine learning to drive customer engagement. As a result, they have the power to decide if their digital experience is comparable to the experience from digital leaders.

Despite understanding the power of data and analytics on the delivery of a great customer experience, most financial institutions do not have faith in the data they are using or the way it is being used. The reasons for this lack of confidence are not due to the amount of data available, but instead due to legacy systems, the lack of adequate analytic talent, internal silos, data access and quality, and executive support of data initiatives.

Most financial institutions are not equipped to bring disparate data sources together, let alone perform the needed analytic steps to enable an excellent customer experience. This is the problem NXTsoft helps solve for financial institutions who what to provide a truly comprehensive digital banking experience to their consumers.

To compete quickly in the digital banking arena, financial institutions can’t afford the time to build solutions themselves or rely on the solutions provided by their core providers. Fintech companies are ready and waiting with the solutions financial institutions need to compete with Big Tech, the key is connecting them in real-time to the data the financial institution already has.

Through NXTsoft’s OmniConnect Enterprise API Connectivity, NXTsoft can provide real-time connectivity from any financial institution to any Fintech-provided solution offering digital banking capabilities in areas such as payments, mobile, fraud mitigation, artificial intelligence, savings, investments, loan origination, or any other solution the financial institution needs to create a competitive digital banking experience. This API-driven integration tactic boosts speed to market, agility to adapt and relevant output. NXTsoft immediately empowers financial institutions to digitize the customer experience by easily connecting cutting-edge solutions that are not currently accessible or available in their core or peripheral systems.

NXTsoft has been in API marketspace for over 25 years and has over 1,000 financial institutions currently utilizing its secure API solution to transmit real-time directly to digital applications. The OmniConnect Enterprise API solution is a lynchpin for any financial wanting to take its financial institution to the next level digitally.

“We encourage any financial institution who wants to build or enhance its digital platform to engage NXTsoft in a conversation,” said David Brasfield, CEO of NXTsoft. We have the connectivity to the core and the relationships with the Fintech vendors and we can advise financial institutions on their digital strategy and then work with them to implement it quickly and cost-effectively,” he said.

It is estimated that as of July 2020, 91% of all bank and credit union clients conducted banking transactions online. Financial institutions need to be ready to deliver the digital experience consumers demand or unfortunately there are others who will.