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If there’s one thing that’s certain, it’s that banks and financial institutions must transform into agile technology companies.
The banking landscape is drastically changing.
Financial institutions are facing difficult economic conditions, near-zero/negative interest rates, demographic shifts, raise of privacy concerns, the emergence of new business models, open banking initiatives and data sharing. Then there is fierce competition from “born-in-the-cloud” start-ups and retailers with lower marginal costs and greater agility that are competing in payments and core banking. A new generation of financial technology companies is aiming to decompose the financial services value chain – selecting high-volume activities like small business and consumer lending, threatening to reduce the incumbents to settlement agents of last resort.
Besides new technologies and disruptive competitors, customer expectations are rising and there is an increasingly restrictive, but at the same time a more demanding, regulation going on. All of this is forcing banks to rethink and evolve their business models, products, and services. But first, they must continue their digital transformation to be able to move away from legacy systems, modernize core infrastructure, migrate to the cloud, improve data management and embrace artificial intelligence (AI).
Unfortunately, many of them are facing big technology debt and are still struggling with how best to tackle challenges related to the old legacy systems, disparate data sources, internal silos, data quality issues, increasing external cyber threats and a culture that has not changed for years. All of this is preventing banks from realizing the full potential of new technologies and to achieve the desired returns of technology modernization.
As mobile and online banking has become more and more popular among customers, banks are closing down their branches and are investing in self-service digital channels, another factor indicating that banks must be very careful about their operating costs. Thus, understanding the business at a granular level and knowing what drives banks’ profitability is crucial here.
PROFITability 5.16 solution – a modern analytical platform that gives you the possibility to track and analyse profitability from any angle.
Another key trend in the banking industry is the increasing role of artificial intelligence, which brings numerous opportunities, not only to retail banking but also to investment banking and all other financial services. Two common goals are to optimize internal costs while improving operations and to enable insights-driven offerings and recommendations to the clients. Use cases that help banks really understand their clients’ needs and also their risk score and the granular level of profitability is crucial to be able to have a 360 view of the client when preparing new offerings.
When it comes to data, there should be no more silos in the banking world between finance, risk, sales and regulatory requirements. Everything is connected and a new data platform should embrace the possibilities of sharing the information between different parts of the organization, so that everyone can use high quality and governed data.
We have been implementing analytical solutions in banking for more than 10 years – with our strong business know-how in risk and finance, merged with our technological expertise, we can help banks in different areas of their analytical needs.