There’s nothing new about the need for retail banks to digitally transform. What is new is the speed with which digitally-driven market entrants are grabbing market share. More agile, faster to innovate, and better at addressing evolving customer expectations, fintechs are a clear and present danger to the survival of traditional retail banks.
The 3 forces driving change
It’s a perfect storm. Three unstoppable forces are converging on retail banking to drive the sector’s digital revolution.
- Customer expectations and behaviors
It’s not just younger, tech-savvy generations who now expect the same level of simplicity and intuitive interaction from their banking that technology delivers in most other areas of their lives. We all do. And our increasingly mobile lifestyles mean that we want to access banking services wherever and whenever we want. We also want more personalization–relevant offers, tailored recommendations, timely advice.
- Fintech’s forward march
Digital-first, sometimes digital-only, new market entrants are hungry and eyeing the rich pickings they see across retail banking. First to adopt new technologies–from AI to IoT to Blockchain–they thrive on innovation. More agile. More responsive. Better at quickly meeting customer expectations and faster to market, fintechs are rapidly stealing market share–and with a 25% predicated annual growth rate in the global fintech market between 2018 and 2022–they show no signs of easing up.
- Sustainability’s sharp end
Now increasingly important as a key differentiator, the pressure to increase sustainability across retail banking is being driven from all angles–investors, employees, customers, regulators, and governments. From operating more sustainably at local, national, and global levels, to providing more sustainable products and services such as green loans, retail banking’s greener future is digital.
It’s no longer a question of retail banks having to improve their digital capabilities. It’s now an imperative that they must dramatically accelerate their digital transformation in order to survive.
Transform Your IT for Banking’s Digital Revolution
Maintaining the status quo is no longer an option if banks are to stay competitive. Banks need a flexible and dynamic IT infrastructure to innovate with speed, maintain resilience and security and deliver new digital experiences.The first of two e-books reviews the compelling case for digital change and the crucial role interconnection has in that process.Download the eBook
The digital transformation set back
Why are traditional banks now considered so inefficient and inflexible in both meeting the demands of today and anticipating the trends of tomorrow? What’s stopping them from delivering against customer expectations for instant convenience, relevant personalization, seamless experiences and innovative products and services?
When you strip it all down, the answer is simple: inflexible, legacy IT.
The retail banking sector is currently relying on IT infrastructure that is no longer fit for purpose. It’s preventing them from making the digital advances they need to compete. Here’s why.
Disjointed product offerings
Legacy IT architectures limit both the integration and performance of new technologies such as AI. These integration roadblocks negatively impact the ability to generate new revenue streams, deliver new products and engage with customers in more seamless and convenient ways.
The siloed nature of traditional IT infrastructures restricts communication, especially across dispersed teams. This severely limits the ability of retail banks to innovate and go to market quickly to prevent more agile entrants from getting established.
Slow time to market
Weighed down by monolithic, inflexible traditional architecture, retail banks struggle to innovate or bring new products to market in a timely fashion. As a result, they can only ever be laggards when it comes to developing new service offerings in response to market preferences.
Lack of customer insights
By locking data in silos, legacy systems prevent the gathering of real time customer data. With poor visibility, data blind spots emerge, making it nearly impossible for retail banks to understand customer needs, respond quickly and deliver personalized services.
Why interconnection is the route to digital acceleration
Retail banks know they need to accelerate their digital transformation. Many appreciate that their IT architecture is inflexible and limiting. But too few are aware that interconnection provides a clear route forward.
Interconnection enables the transition to a more dynamic, flexible and distributed IT architecture. It integrates people, clouds and data, facilitating secure delivery of high-quality digital experiences to customers around the world. Interconnection lets retail banks achieve the resilience and digital transformation they need to succeed.
By using software-defined networking and interconnection services via interconnection hubs–such as those provided by Equinix–retail banks can overcome many of their current IT challenges and embrace the digital future.
Interconnection enables data and analytics to be located closer to customers. That means customer insights can be gathered in real time, improving understanding and speeding up responsiveness.
With interconnection, information is exchanged in real time via interconnection hubs. This real time data exchange improves collaboration across the business and with partners, driving faster product and service innovation.
Interconnection also gives access to a cloud/IT ecosystem, enabling retail banks to scale and deploy new digital technologies with the speed they need to compete with digital market entrants.
With IT resources located closer to customers, customers’ digital experiences become seamless, swift and satisfying–wherever they are.
Can retail banks withstand the advance of fintech companies? Certainly. By taking advantage of the power of interconnection, retail banks can accelerate their digital transformation, protect and even grow market share, and ensure they become the bank future customers want.
To find out more about interconnection’s role in enabling retail banks to accelerate their digital transformation, download our e-book Transform Your IT for Banking’s Digital Revolution.
 Fintech Market Report, The Business Research Company, 2020.