When it comes to embracing digital, banks often don’t know where to begin. Legacy tech infrastructure makes it hard to quickly innovate on the fly, as start-up tech firms do. And then you have to figure out what aspect of the business to digitize: lending, deposit products, wealth management et al.?
These factors and more have led to the current state of bank innovation, where digital initiatives are pursued bit by bit, a little at a time, slow and steady. But are banks moving fast enough to win the race?
An interesting piece this week in The Financial Brand posits that perhaps banks aren’t moving with as much urgency as they should. There are a myriad of things that hinder quick innovation cycles in the banking industry — especially for small-to-midsize institutions — from dealing with regulatory compliance burdens, to budgetary constraints, slow-acting leadership or even just deciding which new technologies to invest in.
And with a whole host of neobanks and digital players in the landscape, not to mention tech giants like Facebook getting into payments, banks need to act. Of course, right now fintechs and digital neobanks are not snatching away huge chunks of traditional banks’ customer base. But it’s planning for 5-10 years in the future that makes investing in digital so important right now.