We often think of technology as a driver of innovation in the financial industry. In a sense, the word “technology” new and Better. But not all technology pushes financial institutions further.
One is the issue of legacy technology, which is reliable but not necessarily flexible or speedy.
Another issue is the mismatch between context and tools. While Gen Z may want flashy new user interface features, older generations may not be interested in these additional features. And it is the latter group that currently benefits financial institutions.
So how are industry leaders navigating the technology landscape to meet customer demands?
To find out, we looked at a cross-section of the industry to see how different financial institutions are tackling technology issues in different areas such as retail, small business, payments, and more.
you can't please everyone
Gen Z's affinity for gamification is well known. And many companies, from banks like Truist to fintechs like Greenlight, Robinhood, and Chime, are incorporating this to make their interfaces more stable. The problem is that banks (especially non-TBTF banks) need to balance building CX for both key consumer segments, Baby Boomers, and future consumers, Gen Z.
Given their love of gamification, Gen Z may want the ability to gamify their financial achievements and share them socially. But older generations who aren't used to these features “consider their financial information to be very private, and it may be taboo to even discuss it publicly,” said Bangor Savings Bank lead product manager. , says Mikayla Smith.
Therefore, for incumbents, introducing new features is a balancing act. “Consider how changes to financial digital services that have the potential to improve the sentiment of younger audiences may impact on, or even degrade, the experience of other demographics. “We need to,” she said.
Mr. Smith's comments raise the important point that not all new technology processes make sense for banks. Also, in some cases, maintaining older infrastructure may be a way to ensure security and stability.
Safety is legacy, speed is software
The average age of small business owners is 60, said Scott Beyer, business banking product lead at US Bank. However, Beyer said many financial institutions are now undergoing a transition to a younger generation and are in the midst of a period of change.
For Beyer, legacy technology is a “building block,” not an obstacle. Older technology provides safety and security for consumer data. However, given that many incumbent financial institutions are now competing with fintechs that can provide speed and flexibility, traditional financial institutions like US Bank are investing in data integration and We have competed by layering software-driven solutions on top of our infrastructure.
The bank is also focused on simplifying its product offering using reusable software components and, where it makes sense to do so, is partnering with fintechs to bring its products to small and medium-sized businesses. We are also focused on increasing the speed of delivery to customers. The idea is to leave what isn't broken. Especially if it can be enhanced through less invasive approaches.
Not everyone took this path. Some financial institutions have taken the plunge and moved away from traditional infrastructure. But that's easier said than done.
Preserving legacy technology is difficult, but not impossible
When it comes to completely modernizing an aging technology infrastructure, company size and scale can be a double-edged sword. On the one hand, it's good to have a large revenue pool to fund your push into the cloud. On the other hand, there is a lot more technical debt to eliminate.
It's difficult, but not unprecedented. At some point, Capital One pushed for a move to the cloud, and although the move was successful, it took him 10 years to complete. In 2020, spurred by the rise in digital commerce during the pandemic, PayPal also moved to the cloud.
As such, traditional fintechs have already made significant progress in moving away from legacy technologies.
But technology isn't the only challenge when building products for Gen Z.
PayPal and Venmo, like Bangor Savings Bank, must navigate the same dissonance between the desires and expectations of Gen Z and older generations. To this end, the company is investing in market research, product testing and focus groups, a PayPal spokesperson said.
Gen Z’s relationship with money is also different. Many of them are just beginning their financial journey, so they are more constrained than older people. PayPal believes this is an important factor to consider when building products for this generation.
For fintechs, which don't operate with as much technical debt as incumbents, the technology is mostly straightforward and forward-looking. For example, Rob Nardelli, Director of Commercial Banking at DailyPay, said his company's partnerships with Visa and The Clearing House allow for faster “OCT (or push to card) and faster RTP.” Forms of payment are available,” it added. Not wires, checks, or “outdated” rails like ACH.For him, technology is simply Patron.
