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    Digital Disruption – A Threat or Huge Opportunity for the World’s Biggest Banks

    June 18, 2019


    Tech and digital disruption has officially hit the Banking and Payments industries, and a tectonic shift is on the horizon. A special report in last month’s Economist sums up the situation. There’s no doubt the customer experience is going to be hugely improved by digital disruption; the days of queuing in a branch to open a new account or applying for a new product may eventually be gone altogether. But for the world’s biggest Banks, this shift poses both threat and huge opportunity.

    Digitally native companies using new technologies, enabled by open banking and backed by huge funding rounds (there was £4.5bn investment in FinTech in the UK alone between 2015-18 as reported in the Tech Nation Report 2019), are making a growing dent in the market share that has always been dominated by traditional providers. Why? Because they are more agile than their counterparts – able to offer new products in a fraction of the time and rapidly respond to customer demand.

    This is now a global trend; from the booming Asian payment apps like Alipay from Alibaba, to rapidly growing UK and European digital-only banks like Starling and Monzo (who have just announced they’re launching in the US). Meanwhile, the US is now starting to see the same shifts and adoption of open banking is looking ever closer.

    But, for the world’s largest banks, the opportunities brought by tech and digital disruption are huge (if you can take advantage of them)

    So how do traditional banks regain their competitive edge? Well, big banks have two things disruptors don’t have – long term customers with loyalty, and masses of existing functionality. The problem with the latter is that it’s so often locked away in silos under huge mounds of technical debt. In the old days this wasn’t a problem as banks were expected to be slow and sluggish. But in this new digital age, how do they rapidly and easily access existing functionality without having to scrap existing IT systems and start from scratch?

    The answer is to abstract those functions away from the silos they sit in, organize them properly and expose them for use as a set of bundle-ready business capability building blocks. As a specialist solution provider to the world’s largest banks and payments providers, digitalML has seen our customers identify on average 5000 monolithic siloed applications within their existing IT architecture. That boils down to approx. 900 building blocks for which reusable microservices can be built.

    With these building blocks in place, the possibilities are endless; be it rapidly launching new digital offerings to customers, building new partnerships or modernizing IT. The biggest banks can use their previous blocker as a leverage to gain a competitive edge over both other banks and digital disruptors.

    To see how the ignite platform from digitalML is supporting the world’s largest banks and payments processors become as nimble as digitally native companies, visit our banking and payments page.

    About the Author
    AvatarGemma Sindall
    Gemma is a Marketing Manager at digitalML. She has a keen interest in digital strategy and the best ways to merge people, process and technology. Her experience spans Marketing and Client Services in the Technology and Financial Services industries.