The financial and insurance market has undergone a huge metamorphosis over the past decade. New fintech companies have been disruptive, and the industry is looking for new technological innovations, such as AI and blockchain. At the same time, companies in this sector face cyber security risks and demanding customers. How do you stay fast and agile, and how do you adapt your application landscape to meet all expectations and requirements? It’s time for App Innovation.
With the support of Ockto Technology, ING is digitalizing its mortgage application process further. Rabobank has invested in online mortgage broker Trussle to improve mortgage processes. In conjunction with Subaio, ABN Amro is offering a subscription management feature in the Grip app, and Triodos Bank is integrating Artesian Solutions, a holistic relationship management platform, into its onboarding process to facilitate and accelerate it.
These are just a few examples of innovative thinking in the financial sector. But how do you implement innovation successfully? With the whirlwind growth of fintech, financial enterprises must closely monitor a range of forces in the market. Technology is crucial to competitiveness; ultimately, it’s the differentiator and delivers unique services for employees and customers alike.
Legacy vs. innovation
Financial institutions are therefore under pressure to invest in new technology, while at the same time often having to reduce costs and comply with growing regulatory requirements. The financial markets are a case in point.
Older financial institutions in particular, including many banks, are struggling with their legacy landscape. Customers and employees expect innovation and customer-friendly, technological solutions, but outdated systems are often an obstacle. New arrivals are well placed to innovate, because their entrepreneurship isn’t encumbered by their legacy. These are the companies in which revolutionary ideas emerge that turn a market upside down. They also have the agility to do so.
Banking systems generally run on archaic servers. A gulf exists between genuine innovation and organizations inhibited by their legacy. In such organizations, the issue is therefore not only the call for innovation, but also the question of how to deal with the legacy.
The financial sector thus faces a number of technological challenges:
- Cyber security: banks’ growing use of technology has triggered an increase in cyber attacks and data breaches. Banks must continually invest in new security measures to prevent their systems from being compromised and to safeguard sensitive customer data.
- Obsolete technology: many banks use outdated IT systems that are difficult to maintain and upgrade. This can lead to delays in processing transactions and make it harder for banks to compete with more agile fintech companies.
- Regulatory overhead: banks and insurers are subject to strict regulations governing data, privacy, money laundering and capital requirements. Compliance with these rules presents a challenge for institutions that must adapt their IT systems to meet the requirements.
- Digitalization: more and more banking services are being digitalized, and customers now expect to be able to access their bank accounts through mobile apps and online platforms. To remain competitive, banks must continue to invest in digital channels and innovative services.
- Integration of new technologies: new technologies such as blockchain, artificial intelligence and machine learning are changing the way the financial marketplace works. The sector must explore the potential offered by these technologies and integrate them into existing systems to improve services and to serve customers better.
App Innovation: The road ahead
The road to innovation begins with a suitable setup for the application landscape. Which applications are critical to the business and which can be retired, replaced or improved? Everything begins with formulation of the right vision and strategy. The following key questions must first be asked: As an organization, what role do we play within the arena in which we operate? How can we set ourselves apart from the competition?
This business strategy is accompanied by a corresponding digital ambition. This provides an organization with a road map for the digital transformation. To truly innovate, the entire IT landscape, applications and architecture must be “fit” for innovation. This almost always means modernizing the architecture of the applications.
A digital & app innovation playbook provides the right steps in this strategy. An organization scrutinizes each application and decides whether it is to be upgraded, retired or moved to the cloud. Every conceivable application qualifies for one of the six strategies.
Financial institutions must therefore respond actively to technological advances in order to remain competitive. To do this, they must take the following steps:
- Invest in new technologies: blockchain, artificial intelligence and machine learning help improve operational efficiency, raise customer satisfaction and create new revenue streams.
- Improve digital channels: invest in digital channels such as mobile apps and online platforms. This involves offering more personalized services, such as mobile banking and digital investment services.
- Adapt business models: this may include partnering with fintech companies, developing new products and services and exploring new markets.
- Invest in cyber security: protect systems and customer data against cyber attacks and data breaches.
- Work to create a culture of innovation: an innovative organization must create a culture of renewal to benefit from its new architecture.
Taking these steps will greatly benefit your organization in three areas:
Agility and speed. With an up-to-date and agile application landscape, you’re better placed to respond to changing customer needs.
Efficiency and cost savings. Cloud native applications enable you to scale up and down in response to increases and decreases in data traffic.
Security and compliance. Modernizing the application landscape also raises the security level. In cooperation with your cloud and application providers, you thereby ensure that you’re always in full compliance with the current legislation and regulations.
Are you ready to take the next step towards becoming an innovative organization? Read more about the app innovation strategy in our white paper.