September 29, 2021
By: Kate Drew
Which of the following, if any, would accelerate your organization’s appetite for more collaboration with other financial institutions and the developer community?
A couple of weeks ago, we explored top barriers to collaboration in financial services, with a focus on how legacy systems and security concerns are hindering efforts across the board. Now, we’re taking a look at the other side of the coin and asking, “What drives institutions to collaborate?” This is perhaps an even more worthwhile discussion because it gets at the drivers that help institutions push past these barriers, and ultimately, find ways to work with third parties to improve their operations and value propositions. According to Finastra’s recent survey, (the same one we referenced in our conversation about barriers), the top accelerator to collaboration in financial services among US financial institutions is better customer service and experience, selected by 58% of respondents, and followed by reduction of costs or improvement in efficiencies, at 49%. (Note: Respondents were allowed to select more than one response.)
Improving the customer journey is extremely important to banks today. In fact, according to our 2021 US Banking Study, it’s considered the top priority for the next five years among both retail and commercial bank executives. Combined with Finastra’s findings, the data suggests that execs realize success here will require working with third parties to leverage the best of what’s out there in the market, otherwise known as pursuing a best-of-breed approach, rather than getting everything from a small handful of vendors. Taking a best-of-breed approach means collaboration is key, and institutions seem willing to make it happen in order to deliver better experiences for customers. This is not only promising, but also extremely refreshing to see.
Moreover, once you make the leap to best-of-breed, it becomes much easier to begin to satisfy other drivers with the same strategy — like creating greater efficiencies, for example. That’s because, truthfully, the biggest transition organizations will have to make is the shift in mindset toward collaboration. For decades, institutions have relied on few providers, often taking a best-of-suite approach to their infrastructure. Embracing the idea that the bank may actually benefit more from a sprawling third-party ecosystem of providers is the gamechanger here; it’s the first domino. So, while we may be talking about customer journey and collaboration today, the deeper conversation is actually about a fundamental change in how our institutions function and view the market. Over time, barriers like legacy systems and security concerns will likely be overcome, as banks begin to more strongly believe that they can operate better and deliver more value with a little bit of the right help in the right places. It’s only a matter of time.
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