Banks will need to be flexible and willing to manage constantly evolving hybrid environments.
5. Experiences and open ecosystems trump applications and infrastructure.
In the past, core platforms supported limited third-party services, using them to enrich internal applications and data repositories, most of which were managed on-site or through corporate data centers. Banking was essentially a closed ecosystem and banks were in full control.
The current drive to open banking standards started with a focus on transparency and data portability. However, it also enables ecosystem experiences by streamlining data sharing with third parties and diverse infrastructures, typically via the cloud. Such external connections — including potential collaborations with FinTechs — represent the shortest path for banks to produce innovation and deliver attractive services and experiences like those offered by Uber, Netflix or other digital leaders. That means core systems are only as good as the tools, data and experiences they enable banks to deliver via open ecosystems.
Core systems are only as good as the tools, data and experiences they enable banks to deliver.
6. Your data wants to be accessible and useful.
Historically, banks have tried to capture as much data as possible and keep it locked down. They wanted it all to be internal or “first-party” data. Even though data volumes were tiny compared with today, they weren’t analyzed as fully or sophisticatedly as possible. Just having the data seemed to be enough.
Today, everyone understands the massive power of data. That’s why they seek as much as possible and in as many forms as possible. But they also recognize that data must be actively used. Indeed, there is a widespread consensus that tomorrow’s most successful banks will be those that most effectively unlock the value of diverse data — not only their own, but third-party data too. Unstructured external data can greatly enhance analytics and lead to powerful insights, which are among the scarcest and most sought-after commodities in the industry.
The most valuable insights are those that are actionable and can be monetized.
7. Trust and security are built into platforms, rather than being barriers to accessing them.
Banks have always prided themselves on being trustworthy brands and companies. But in the digital age, trust has taken on entirely new dimensions, thanks partly to cybercrime. Strict security is needed, but banks can’t afford to lock down key processes. Instead, they should look to instill trust and strong security principles directly into their ecosystems, experiences and products.
Modernized platforms help ensure banks can instill trust as they share data and integrate with more players and more systems. Beyond a consumer focus, future business models and high-performing ecosystems will be based on such fast and widespread data sharing, even as the volumes of data being shared increase dramatically. The right approach to commercialization requires robust security.
Banks should look to instill trust and strong security principles directly into their ecosystems, experiences and products.
Summary
The core's role has been reduced, thought it's still important. To a large extend, the main job of a core today is to get out of the way - that is, not prevent business from launching new products quickly and delivering the experiences customers expect. The new rules of core modernization reflect that banks must move to futureproof their operations and aproach to IT. It's imperative because customer expectations will only rise, the pace of change will only accelerate and the competition will only grow more intense.
