Joel Rosenberger, Business Development Manager, TCS BaNCS
Financial institutions face continuous pressure from banks, FinTechs, and non-banks to differentiate their products, services, and brand in the financial services market to stay competitive and drive growth. Intense market pressure is coming from every direction, including regulatory demands, changing technology, digital currencies, FinTech's, and more. These pressures leave FI's searching for true differentiation in their products, services, and brand in today's market. These are not new threats driving the need for differentiation. In fact, you might feel like you read this narrative 10 years ago!
What is evident in today's market is that these immense market pressures have been rapidly increasing and show no signs of slowing down. Covid-19 came along and threw gas on the fire when it came to digitally differentiating products, services, and brands. Financial institutions understand the market pressures to differentiate themselves and the consequences if they don't. So, what is keeping so many financial institutions from realizing true differentiation?
Your core processor may lie at the heart of your inability to deliver true differentiation. The market has thousands of new technology products and services available for FI's to help create their differentiated products, services, and brand. Yet, many FI's are still using legacy core technology developed 30-50 years ago, creating the roadblock for FI's to realize their full potential due to insufficient data, lack of real-time integrations, inability to provide 24x7 service, and efforts to maintain regulatory compliance.
FIs must take action to remove the roadblock that stands in the way of true differentiation. Core replacement is never the catchy technology project that FIs want to tackle. Unfortunately, the band-aid approach of trying to upgrade legacy technology isn't conducive to long-term success. Today's core banking technology has shifted to allow for a true componentized SaaS offering for specific use cases. This allows FIs to take a phased approach when replacing their core, making a core conversion more efficient while reducing risk. FIs will be able to identify segments where they want to differentiate, such as small business lending or commercial deposits. Migrating these segment-based components to a SaaS offering allows FIs to begin removing the roadblock of their legacy core processor and realize true differentiation in their products, services, and brand.
Disclaimer: Views or opinions represented in this blog is based on author’s own research and does not represent TCS BaNCS