Don’t Get Frankenbanked: When a Financial Institution’s Tech Stack Goes Rogue
Many banks and credit unions have inadvertently created "Frankenbanked" systems—technological monstrosities assembled from well-intentioned but poorly integrated digital solutions. The solution requires a shift in mindset — treating digital experience as a strategic investment and embracing comprehensive digital strategies that match brand values.
By Mark B. Egan
In the rapidly evolving financial services marketplace, new technology and advanced features are essential for institutions that hope to keep pace. Yet many banks and credit unions that are trying to stay current can find themselves tangled in a web of disconnected digital solutions — to scary effect.
Such institutions start with an intention to offer better products and services. Each component has been bolted on for a good reason. Each software vendor along the way has done exactly what it was supposed to do. But the technology platform that emerges is a lumbering monstrosity.
We call this getting Frankenbanked — slowly becoming a financial institution whose disjointed systems result in a fragmented customer experience and generate unchecked operational overhead that threatens long-term competitiveness.
The missteps in technology integration seem innocuous at outset, and well worth whatever tradeoffs they demand. However, as more elements are added — a chatbot here, a credit score widget there—the points of disconnection degrade the user experience. As with any organization that lacks a holistic view of its technology, hidden costs accumulate. These costs manifest in exorbitant integration expenses, inefficient processes, missed cross-selling opportunities, and ultimately, the loss of customer loyalty — particularly among younger, tech-savvy clients..
Recent research indicates how important customer loyalty is: The 2024 J.D. Power U.S. Retail Banking Satisfaction Study reveals a steady erosion of trust, with 13% of customers contemplating a switch in the near future. In an era where, as J.D. Power reports, the average customer interacts with their financial institution every three days — be it digitally, over the phone, or in person — ensuring a seamless, consistent experience at every touchpoint is imperative. Meanwhile, from an operational perspective, with interest rates high and consumer confidence shaky, now is no time for a financial institution to lose control of its cost structure.
Here are four critical warning signs that your institution has been victimized by Frankenbanking — with insights into how to breathe new life into your technology, and set it on a path to improvement.
1. Frankenbanks Can’t Get Personal
For community banks in particular, competitive advantage lies in the ability to forge personal relationships with customers. But when critical customer data is scattered across disparate systems, bankers lose the opportunity to offer tailored service. A cohesive data strategy is essential — not only to understand customer needs but also to provide the high-touch service that larger institutions struggle to replicate.
Edwin Akrong is a Senior Vice President of Product at Narmi, a technology company that specializes in helping community banks and credit unions better leverage their digital capabilities. Perhaps surprisingly, Akrong says the first step to avoid falling into a Frankenbanking trap is not about technology at all. It starts with knowing what you do best: "You can’t out-mass-market the big banks. If service is your thing, then master it — including the digital environment."
Which leads to a second mindset shift: The decision to deliver a better digital experience is not unlike the decision to open a new branch; it has a measurable cost and a measurable return. Opening and then running a new branch is a major investment[1] [2] , but an improved digital experience can be a fraction of that amount and unlock access to many more customers.
According to a white paper from Narmi, misperceptions about costs, features, and functionality — reliance on one-size-fits-all checklists and standard RFPs — can lead institutions to shy away from the digital improvements they really need. Much like the furnishings and amenities a bank might choose for a new branch, the new digital experience should match the bank’s or CU’s brand values and customer relationship ambitions.
2. Frankenbanks Don’t See the Whole Customer
Many financial institutions organize their operations in silos — separating, for example, retail and business accounts into different units — and this structure flows through to the customer or member experience. Account-holders, who instinctively know they should be able to log in once and then toggle between personal and business views, are forced to navigate multiple platforms. They feel they are wasting time (or worse, feel disrespected) and unable to efficiently manage their money, leaving them to wonder if they are working with a second-rate player. Under such circumstances, integrating these systems is not merely a matter of repaying technical debt, it’s a strategic imperative.
Once again, misperceptions are holding the financial institution back. According to the Narmi white paper, titled Your Digital Front Door Is Broken, banks avoid taking definitive steps to deliver a holistic view of the customer because they believe it will elevate fraud risk and weaken internal compliance controls. The solution here, Narmi writes, is to involve compliance early in the integration process: "By involving compliance and regulations teams early and often, institutions can ‘stay frosty’ to fraud attempts while re-imagining what the account opening experience can be in a digital environment."
3. Frankenbanks Are Inflexible
If your institution has fallen victim to Frankenbanking, the problem is not just in your parts but in the joints that connect them. It’s not unusual for a contemporary bank to rely on a variety of digital providers — each excelling at a specific function, such as account opening, loan processing, or customer communication. However, when these vendors fail to integrate their systems effectively, the institution pays the price. Misaligned APIs and fragmented software ecosystems lead to inefficiencies and, again, erode trust, both internally (for your bankers and customer service team) and externally.
One way for a financial institution to get around this challenge, according to an analysis by McKinsey, is to treat its suppliers as strategic partners rather than mere vendors, with regular touchpoints to ensure alignment. When evaluating which partnerships to maintain, McKinsey writes, consider targeted questions such as: "Which suppliers matter most to the business, and can the individuals managing these relationships represent the institution as a whole? Is the focus on future opportunities rather than just reviewing past performance?" These insights can transform supplier relationships, boosting both current operations and long-term competitiveness.
4. Frankenbanks Don’t Know Where They’re Going
In a world where single-view dashboards are increasingly table stakes for all businesses, institutions that have been Frankenbanked are behind the curve. Many FIs still operate without a centralized view of their operations. They don’t have access to real-time insights and KPIs — from abandonment rates to deposit fluctuations to system downtime. For banking leaders who place value on effective decision-making and operational agility, an all-in-one, intuitive interface is essential.
For banking professionals, particularly your emerging leaders, the paradox is painful: In their personal lives, they have access to an efficient consolidated interface; it’s their smartphone. They use it daily for news alerts, business and family messaging, meal delivery, transport, and more. But in their business life, such empowerment remains out of reach.
The lesson is clear. Piecemeal approaches to technology integration can put your institution at risk of falling prey to Frankenbanking. The tale of Frankenstein is a cautionary one: what begins in innovation can sometimes end in unintended outcomes.
For financial institutions, the mandate is urgent. Embracing a comprehensive, integrated digital strategy is not merely about improving customer experience — it is about cost-effectively vaulting your institution into the future. By diagnosing and addressing the signs of Frankenbanking, banks can transform hidden costs into competitive advantages and lay the groundwork for sustained growth in an increasingly digital world.
