Why Core Providers Won't Help You Achieve Full Digital Transformation

Banking And Financial Messaging

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Leo Gil

Mar 9, 2020

There is clearly a “core” reason why full digital transformation is elusive.

For many financial institutions, the future points to a fiercely competitive landscape with emerging new players, rising customer expectations and constant innovation. Brands like Amazon, Netflix, and Uber have set a new standard for customer engagement and seamless experiences — consumers have seen what is possible, and they know that the financial industry can, and should, do better. In fact, according to Celent, 82% of banking executives say that customer expectations outpace internal adaptations.

Many financial institutions (FIs) are opting to expand their core systems in order to meet digital transformation goals. After all, banks and credit unions already have these core systems in place, and many providers of those systems have made advancements to their offerings in order to meet basic digital imperatives. One survey revealed that a staggering 43% of FIs that chose to add digital account opening services to their offering opted to do so by buying enhancements to their core systems.

On the surface, this number makes sense. Financial institutions are already familiar with their core providers and data is already housed within those systems — making it seem like an easy, inexpensive, and low-risk way to digitize services. Unfortunately, while every core provider is different, this approach often only delivers a false sense of security and progress.

While a financial institution can gain a basic digital front-end for account opening from its core provider, many cores are lagging when it comes to the richness of overall product features, back-end analytics, customer insights, and risk and fraud capabilities.

Financial Institutions would do best by ditching the single-mindedness of their core solutions, opting for online platforms built with a customer-centric digital transformation from the ground-up, where customers are not simply transactions, but relationships

When it comes down to it, core systems simply are not equipped with the technology necessary to make the best use of customer data. Often, it’s difficult to access, integrate, and view data in a way that leads to rich, actionable information. Only strategic fintech partners will be able to unify data sources, helping to build a foundation for the proactive, positive experiences that customers expect. Financial Institution employees don’t have the time to hunt down key data on each customer for retention purposes — they need a holistic view of the customer through a single, easy dashboard. That’s something core providers are unlikely to provide.

Moreover, core providers generally provide a basic risk and fraud solution, one that is very limited in its authentication and identity verification capabilities. Rarely does a core solution come out of the box with the robust, layered, intelligent risk and fraud approach powered by the machine learning capabilities that are seamlessly embedded within the customer experience.

The bottom line is that full digital transformation is much more than having an online presence or acquiring customers online; it requires a comprehensive end-to-end approach to simplifying, streamlining, and accelerating back-end processes to deliver customers with a number of competitive, state-of-the-art products while also providing bankers with access to data and insights that enhance the overall customer relationship and drive prolonged customer engagement. A piecemeal approach to transformation, or choosing a provider without a forward-thinking, seamlessly integrated approach, will undoubtedly send customers down a complicated journey.


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"Digital from the start: The ROI of digital account opening,” including results from a research study sponsored by Bottomline Technologies and conducted by American Banker and SourceMedia Research, 2018

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Leo Gil

Leo Gil is the VP of Product, Customer Acquisition and Growth Solutions at Bottomline. He works closely with financial institutions to design and deliver innovations in payments, cash management, and customer engagement solutions. He has more than 20 years of experience in the software industry with focus on financial technology services.
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