Tuum had a great time at the Nordic Fintech Summit 2022. One of the highlights for us was the Banking Technology Stack panel, where our CEO and Co-founder Vilve Vene joined the discussion on tech stack developments in the banking industry.
If you missed it, you can watch the inspiring panel below:
Cultural change before digital transformation
Although banks were among the first adopters of computer technology, the journey of moving away from in-house legacy systems to modern, cloud-based systems has been relatively slow for a variety of reasons.
Firstly, banks are, by design, built to resist change. They rely heavily on the trust consumers place in them and are bound by the compliance and risk processes that guarantee this trust.
And banks’ infrastructure is a reflection of their culture of resistance. This means there needs to be a change in philosophy before the change in technology can happen. Just trying to replace or upgrade the tech stack without changing the way the bank is run will most likely lead to failure.
Secondly, banks feel that the transition is difficult and comes with many risks. But it’s equally important to consider the price of not taking the risk. What could be the ramifications of that?
“Banks are afraid of taking this journey because of the risk that comes with it. But maybe it’s a bigger risk to stay where they are.” – Vilve Vene
Productising core banking
Banks have invested a lot in their front-end, customer facing technology over the years. However, the back-end looks very much the same. Unfortunately, a perfect customer journey can’t be built when the back-end is so far behind.
With so many new neobanks and fintechs entering the market, offering a modernised customer experience, it’s time for banks to act. There are generally two options – focus internal resources on the development of a modern core infrastructure, or partner with an external vendor to leverage their core banking capabilities.
Although not possible 10-15 years ago, we’re now in a situation where banks can rely on core banking providers who can deliver core functions in a more standardised manner. But the devil is in the details. Banks have to carefully consider which vendor can offer the right configurations to meet all of their needs.
Find our more about choosing the right core banking provider.
Collaboration driven ecosystem
The focus in the financial industry has slowly started to shift towards a more open and collaborative approach to innovation.
Rather than trying to compete with everyone, offering generic services, it has become much more about defining your place in the value chain and understanding where you can offer the best, customer-centric services.
Even banks have realised it’s not necessary, or even reasonable, to do everything themselves. They are increasingly trying to find partners and alliances that can complement the way they are offering new services to customers.
In the upcoming years, collaboration in the financial sector will become even more important, because this is the only way we can build a more efficient shared ecosystem structure both nationally and internationally to fight financial crime and do much more.
Want to learn more about Tuum? Get in touch with us today!