How to Avoid a Disaster When Switching Your Core Banking Platform

Most banks and credit unions are considering converting their legacy systems. When selecting vendor partners for this massive undertaking, it is absolutely imperative to ensure the user experience is the most paramount factor driving the final decision.

In the past, most financial services organizations have been focused on selling their services through a branch office, face-to-face. Today, the majority of sales are initiated through online or mobile channels. Unfortunately, the systems that adequately supported offline sales do a far less satisfactory job when asked to support the expectations of the digital banking consumer.

As a result, most banks and credit unions, especially small and medium financial organizations, require assistance in the transition from the legacy system to future technology solutions. This transformation will help to meet clients’ growing expectations and save banking business in the future.

Cooperation with digital banking platform vendors provides banks and credit unions with the speed and flexibility which is essential in the fintech + banking era. Solution providers have significant experience, special skills, and are ready for the prompt implementation of digital solutions. As a result, it saves time and resources for financial institutions when implementing new solutions.

Finance vs. Technology

Everyone involved with the banking industry sees that the domination of digital technologies on the market requires a technological transformation from banking of yesterday. Banks that are too slow, stuck in the past, too conservative and unwilling to change are going to have significant obstacles in the future. This is the reason why digital banking software providers have a significant role. They can take over development, new feature implementation and technical support letting the financial institution focus on digital competencies in financial management services.

Unfortunately, not all banks can handle successful digitization on their own.

Quite often, their implemented solutions end up being just an item on the digitization to-do list, with the goal being to be considered as a modern, trendy bank, that also has functional digital channels. This results in either a superficial PR stunt for investors, and quite often the results do not meet customer expectations.

This is because the initiatives introduced by traditional banks aren’t always enough to adjust corporate culture and business processes to the digital age. CX, UX, design thinking and a user-centric approach are often regarded as purely marketing tools, instead of taking their rightful place in the transformation of business processes.

Banking technology providers developing ready-to-use financial solutions have a strategic advantage over banks. They get a lot of experience and expertise each time delivering their digital platform for different bank and use this experience as a performance resume. Banks are offered a solution based on a professional approach and experience with other clients. It helps to position the vendor as an option to avoid the many pitfalls that banks may face in case they try to build a platform themselves.

This stimulates an increase in the demand for vendors’ digital banking solutions. After all, the choice of platform implementation is obvious in terms of hard competition, services globalization, threats from fintech firms, and users’ growing expectations. As a result, banks expect vendors to integrate modern technologies with minimum time and resources.

Obstacles to the Perfect Digital Banking Platform

Considering the vast amount of transformation occurring in the banking industry and the need to convert legacy platforms, it is clear that most financial services organizations will depend on third-party solution providers. There is an objective to integrate innovative technologies to reinvent banks through platforms that meet business needs and offer the best UX. Yet, some of vendors face complex situations that can slow down or negatively impact the progress of their clients.

Technology giants and fintech startups have a higher level of users satisfaction than traditional banks. It’s not only because banks cannot carry out digital transformation on their own. The problem is that digital banking system providers do not always provide users with a cutting-edge experience on their platform. It’s crucial to perform banking digitization as soon as possible, but in the end, the UX defines if the users stay with the banking organization or prefer another service.

What prevents some banking vendors from meeting today’s digital consumer needs and what can be done about it? Here are five things to think about as you weigh the options for any future core banking platform.

1. Lack of Human Centricity

Third-party banking platform development teams usually consisting of many engineers. These engineers have great technical skills, as the banking developing process is incredibly complicated, with the highest levels of stability and security required. In this corporate culture, the ‘technical genius’ usually becomes the leader of the implementation team. Unfortunately, UX architects, as user advocates, do not always have a proper place in these development teams.

In fact, a strict technical orientation may create a lack of empathy in the whole team, which is a necessary element for user-centered solutions. It gets more complicated when there is a lack of clear understanding for whom the final solution is intended or the end-users who will be employing the solution. It is very difficult to evaluate user scenarios and provide the best UX while creating a universal solution.

Of course, vendor designers can provide a beautiful and modern looking interface. But, what looks good for sale doesn’t always match the key-user scenarios and may not have good usability. To create the best UX, the team needs to involve cross-disciplinary UX architects with expertise in user psychology, marketing, financial services, business processes, technical solutions, and interface design for different platforms.

2. Functionality Obsession

Banks and credit unions usually choose a vendor based on the technical aspects and offered functions. In response to their request, vendors pay special attention to the functionality scale. Extra functions are often promised as additional tools to sell the platform being proposed.

However, recent studies of user behavior indicate that it’s no longer enough to focus on function accessibility. For users, it is more important to understand the service and it’s usability. If it is too complicated and inconvenient, the user will switch to an alternative – a simple service which may lack extra user preferred functions.

Special attention should be paid to the user needs and desires throughout the whole bank-software vendor chain – from the bank’s management to the vendor’s management and developers – to optimize the product through the collection of users feedback to constantly improve the UX.

Realizing this, many banks actively switch from buying just functions to user-centred solutions. Unfortunately, not all online banking providers focus on the user aspect. Therefore, functionality does not always meet users needs. Here, the best advice for vendors is to stop delivering software and start delivering better user experiences.

3. Outdated Technology

The development of complex banking platforms takes years and millions of dollars in investment. At the same time, a core banking platform provider should take into account all possible requests of the different banks in advance. Unfortunately, many solutions may become out-of-date at the moment of release, as technologies change rapidly. This leads to a shortage of ready-to-use solutions.

A modular development approach comes in handy here. The development and delivery of separate modules simplifies the implementation of integrated solutions. It also provides good opportunities for small vendors dealing with a narrow development aspect of the total solution. Unfortunately, they do not always meet the complex needs of large banks and this can cause integration difficulties.

4. Platform Limitations

The main goal of an omnichannel banking platform is to offer a universal solution. Make one size fit all. But there’s another side of the coin – this type of solution does not always fulfill every possible need and use case of the bank and their users. However, that’s the only way the internet banking vendor can ensure the platform will further support development and save banks’ resources.

As the IT vendors’ main efforts are focused on creating a universal and stable back-end solution, user interface design becomes a platform ‘hostage’. It’s essential for the bank that the product reflect the bank’s image, create an emotional interaction, and strengthen customer loyalty through the best UI solutions and also a perfect UX. But in the limited terms of a standard solution, it is not always possible to ensure that the product meets the needs of the bank and considers all the aspects of user behavior.

Banking vendors can make UX customization an integral part of the platform to compensate this drawback. Also, the development and use of the Design System can provide the flexibility needed for the solution integration into the needs of a particular customer.

5. Excessive Complexity

The development of a universal ready-to-use banking solution implies a lot of work. This solution should cover different user scenarios from different banks and regions. In its essence, this solution is a complex super-set that can be configured to the request of a particular bank.

It‘s difficult to give a complex solution providing the user with a simple and enjoyable use flow for every scenario. In addition, it gets worse when new elements (not provided in the basic architecture) need to be added at the request of the bank after the sale.

This can lead to an extremely negative UX, caused by the information architecture complexity, an increase of the user-learning curve, user cognitive overload, and over all frustration. Therefore, special attention must be paid to the banking platform information architecture at the initial stage of the development: it must be intuitive and scalable.

Banking of the Future Depends on User-Centric Partners

Vendors are definitely improving their products and want to make them user-centered. To achieve that, they hire UX experts to work within their product development team. They also cooperate with external UX agencies and consultants. At the same time, banks are getting more and more active in compensating UX drawbacks on their own.

In particular, some banks separate the implementation of the basic platform and the development of the UI. This allows them to use a ready-to-use vendor solution while still providing the best UX on developing the interface with the UX experts.

These market difficulties provide opportunities for small and ambitious newcomers. Despite the large core banking software providers’ domination of the market, more and more “new wave” digital banking vendors are appearing. They are aggressive and trying to “carve out their own piece of the pie”. For that they use an innovative approach and rapid iterations.

Over the past two years there have been many interesting and technically advanced banking platforms emerging on the market. Young digital vendors have faster delivery and a more customized integration, although the scale of these solutions are often inferior to large vendors and may not always be suitable for complex banking solutions. However, they are of great interest to some smaller banks.

Five UX Values to Look For When Selecting a Digital Banking Vendor

As already mentioned, ready-to-use digital banking solutions have significant advantages. Most banks prefer to integrate them instead of using in-house development. Therefore, these solutions can greatly determine the future of the banking industry.

Will these digital solutions be able to become sufficiently user-centered and innovative in order to compete with the fintech startups actively disrupting the financial industry? Banks should pay attention to five key aspects when choosing the ideal digital banking platform especially regarding UX.

1. Platform corresponds to the bank’s UX strategy. It is necessary to have a clear UX strategy in order to choose the ideal vendor that maximizes the bank’s value for consumers. What banking products and activities are essential? What form should they have in digital channels? What user emotions and reactions should be according to the bank’s positioning and identity? A solution that is too formal is not suitable for an informal and revolutionary digital bank and vice versa. For example, strict lines and a template interface may conflict with the image of a democratic and friendly banking brand. Digital products should represent the key values of the bank.

2. Information Architecture is simple and intuitive. It’s vital to see if it’s easy for users to understand the banking platform information architecture. It’s not just about the interface for bank’s customers, but also about the administrative environment. Over-complicated and confusing interfaces increase training costs and the risk of errors. Also, they irritate and discourage users. Make sure that the sections and content blocks of the solution are grouped into clear and user-friendly way. Ideally, you should minimize the number of key sections and modules. This will help the user to quickly frame the actual service mind map. Use clear naming in navigation and avoid professional slang.

3. Solution provides key user scenarios in an easy and fast way. Make a list of priority user scenarios, according to current behavior. Thus, a list of user expectations is generated for each digital banking product. Based on this list, it is possible to evaluate to what extent the product offered by the vendor is usable and whether it will meet the real needs of the bank’s customers. These scenarios execution should be simple and understandable for any user. In addition, a user’s typical Failure Map can be developed for a deeper analysis. After all, the negative experience is best remembered. Therefore, a good solution must take into account any possible bad scenario.

4. High performance comparing to other market alternatives. The products are launched on a competitive market. Banking users have more and more opportunities to choose from. They compare different solutions with different criteria: technology, visual environment, convenience, cost, clarity, and simplicity. Make sure that the solution offered to your bank beats your competitors, or is at least at the same level. It should look modern and offer cutting-edge user experience in solving customers’ problems.

5. Opportunity to tune-up UX after users’ feedback. Delivering the best UX does not finish once the digital financial service is launched. Users’ feedback should be a powerful source of insights for constant product improvement.

Therefore, you need to make sure that the banking software vendor is able to make changes after the solution is released and ready for continuous platform development. It may also be important for the bank to get access to the software to improve the product themselves.

BOTTOM LINE? Digital banking solution vendors play an important role in banking. This influence will grow in the total digitization and open banking age. Taking this into account, banks need to clearly state their needs and encourage IT vendors to develop in the right direction.

Banking platform vendors should consider their responsibility for delivering great user experience solutions for the future of the financial industry. The users’ choice of banking service, or their decision to search for a fintech alternative depends on how innovative, user-centered, delightful and usable banking vendors solutions are.

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