Monday, May 9, 2016
Digital Banking Demands New Technologies & New Vendors:Gartner
Banks face intense pressure to increase efficiencies and reduce costs while delivering next-generation digital services; however, legacy application vendors have been slow to respond to new requirements, according to a new report from Gartner, Inc.
Gartner predicts that by the end of 2019, 25 percent of retail banks will use startup providers to replace legacy online and mobile banking systems.
New vendors are emerging to meet both customer and bank needs for channel integration and dynamic customer experiences that make banking easier to accomplish on the devices customers want to use. These vendors challenge the traditional — often incumbent — vendors of traditional online and mobile banking and core banking solutions.
“Startups and emerging providers of digital banking platforms offer banks interesting opportunities for innovation,” said Stessa Cohen, research director at Gartner. “However, CIOs must prepare to manage the challenges of evaluating and selecting new vendors that may not have proven track records in the financial services vertical or may simply be new and untried without an extensive customer base. It can be difficult for CIOs to justify investment in their solutions to their boards and regulatory agencies, but don’t use that as a reason to exclude new vendors.”
Gartner advises bank CIOs to work with business leaders and other key stakeholders to assess the bank's comfort with, and ability to manage, the risks associated with using new providers, especially financial technology startups.
“This is why many banks developing digital banking strategies to meet customer demands have sought out new providers to replace their existing online and mobile banking solutions with digital banking platforms,” said Ms. Cohen.
Gartner views open unified digital banking platforms as an emerging technology, even though some of the solutions on the market, including some from niche banking system vendors, have been available for several years.