Opinion  

Bank systems need to catch up with modern tech

Ammar Akhtar

Ammar Akhtar

Today, many banks offer some form of online lending capabilities; tracking the status of a loan, accessing basic account information and making loan payments are actions that customers can carry out digitally.

Despite advances in digitisation, the average lending or mortgage process can be unnecessarily complicated, even antiquated – a realisation that customers and lenders alike are quickly coming to terms with. The process of finding, applying for, and completing on a mortgage, for instance, remains archaic.

Many back office processes remain highly manual, which can cause delays and frustration for customers who are increasingly expecting seamless, mobile-first experiences, including the ability to directly interact with their accounts and financial data. 

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The old banking model, based around branch visits, phone calls or limited digital options simply does not fit the mindset of the present-day consumer or private business. The world is now mobile-first and people are demanding simplicity, immediacy and, ultimately, responsiveness.

Why do customers need to deal with paper forms, or long wait times (or just 'computer says no') for changes on an account when they can buy, pay for and receive almost anything in 24 hours in just a few taps?

We recently commissioned a survey that found that 18 per cent of mortgage customers are stuck with a product that is no longer suitable for their personal circumstances, while just shy of half (49 per cent) would like their bank to offer more flexible products.

The problem stems from technology that is necessarily complex but unfortunately inflexible. This is partially due to the age of these systems, but also because of the corporate histories of many lending businesses where multiple mergers and acquisitions or 'IT transformation' projects resulted in a layered assortment of systems that likely did not fit any single vision.

In recent years there has been much progress in this space thanks to renewed focus on delivering great customer experience. Neo-banks and fintechs have aptly demonstrated the art of the possible by building large parts of their technology from scratch, and setting a high bar for incumbents. 

Many vendors have entered this space as well, offering the ability to design and deliver web and mobile-first apps that can run on top of existing core systems – but there are limits to what can be achieved in this approach, as core banking systems and the end-customer experience are intrinsically linked. 

The wave of modern core banking systems that have come to market over the past decade or so are aiming to change that. They bring with them the promise of supporting more flexible products, increased self-service (for customers and staff alike) and better use of data. 

These systems are built to be quick to set up or upgrade, make use of cloud technologies, and are open to far greater integration with other systems. All of this means that a traditional bank can start to look like a technology company, and then, start to behave like one – arguably a prerequisite to build customer loyalty and increase retention for the coming age.